<p>The first of the two essays in this dissertation uses primary data from Bangladesh to explore the role of microloan repayment frequency (weekly vs. bi-weekly, assigned randomly) on loan repayment performance of microfinance borrowers after controlling for their inherently distinct time preferences. The findings show that the borrowers’ individual time preference is an important determinant of their repayment behavior. Specifically, the repayment performance of present-biased borrowers improves significantly when they happen to be assigned to the weekly repayment schedule instead of the bi-weekly schedule. Also, irrespective of time preference, borrowers are found to invest more in new businesses under a more flexible (i.e., bi-weekly) repayment schedule. Overall, our findings suggest that instead of a "one size fits all" approach, by offering loans with a weekly (bi-weekly) repayment schedule matched to the present-biased (time-consistent) borrowers, the MFIs might be able to minimize their transaction costs while ensuring high repayment rates. This would also benefit the borrowers by enabling them to venture into new business investments. </p> Using primary data from Bangladesh, the second essay seeks to examine two aspects of religiosity that might affect the microfinance borrowers’ repayment performance. First, whether individual religiosity influences repayment behavior. Second, whether the impact of religiosity changes with borrowers’ age, and level of community religiosity. The results show religiosity to be a significant determinant of a borrower’s repayment behavior, as individuals with higher religiosity are found to be better borrowers. Also, the positive impact of religiosity is stronger for older borrowers, and for borrowers who live in comparatively less religious community. These findings indicate that MFIs can take into consideration the degree of individual and community religiosity to decide on the intensity of supervision required for borrowers. Borrowers with higher level of religiosity can possibly go on with minimal level of supervision as they are less likely to default. This reduced supervision would reduce travel costs incurred by MFI staff, making operations more cost-effective. This will also help free up loan officers’ and borrowers’ time. Thus, MFIs and borrowers can take advantage of this and invest time to other productive activities. The MFIs can also make better use of the freed-up staff to increase coverage.

This thesis makes a contribution to that part of the economics literature that explores how behavioural economics can inform environmental economics. Theoretically, the thesis develops the concept of environmental morale. Empirically, the study investigates the role of environmental morale on individuals’ behaviour within two different contexts: recycling participation and intertemporal choices over different goods (i.e., money, environment, and health) and outcomes (i.e., gains and losses). Major objectives of this analysis are: to shed light on how environmental morale interplays with individuals’ behaviour under different recycling policy schemes, and to examine whether temporal discounting is domain specific and depends on environmental morale heterogeneity. Original survey investigations are employed to analyse these issues. Results highlight the relevance of environmental morale both in motivating individuals’ contribution to recycling and intertemporal choices towards environmental outcomes. Regarding the interaction between environmental morale, recycling participation and government interventions, results from this analysis suggest that a facilitating nudge policy seems to be relatively more powerful in increasing individuals’ contribution and motivation towards recycling. Considering intertemporal choices, a paradox of hyperopia seems to be located in data provided in this analysis. Some of the original contributions of the thesis are, first the broader reconceptualization of the definition of environmental morale and its operationalization in analyses of questionnaire preferences. Secondly, in line with other areas of research (i.e., tax compliance literature); this study pursues an investigation of individual and cultural differences with respect to recycling policies, an area which has been neglected in the environmental economics literature. In this regard, the analysis considers a comparison between psychology and economics students in Italy and the UK. Thirdly, conditioning discounting on environmental morale offers a unique opportunity to analyse how ethical considerations influence the way individuals form expectations on (near and far distant) future environmental outcomes.

The extensive literature on financial literacy has sought to explain financial behaviours and decisions. On the asset side of the balance sheet, financial literacy is associated with good financial practice and wealth accumulation. On the liability side, however, the contribution of financial literacy to individuals’ financial decisions is not entirely clear. To add to this literature, as well as that of behavioural finance and alternative financial services, this research develops a conceptual framework based on Ajzen’s (1991) theory of planned behaviour (TPB). This framework links individuals’ attitudes to financial matters, subjective norms, perceived feasibility, financial knowledge, and behavioural biases that include overconfidence and present bias on the decision to obtain high-interest loans. The empirical tests of the developed framework suggest that individuals in distinct socio-economic groups have different antecedents that lead to borrowing from alternative financial services. For instance, individuals from low-income households are more likely to obtain these loans if they: do not have access to other forms of credit; struggle to pay their bills; are unemployed; or do not have access to advice from finance professionals. In turn, individuals from high-income households are more likely to obtain these loans if they lack financial knowledge or have behavioural biases like overconfidence or present bias. These results suggest the importance of access to professional advice while ensuring access to traditional means of obtaining credit for low-income individuals in order to reduce the negative effects of these high-interest loans. The results also confirm the importance of current policy initiatives to implement basic finance education in public school curriculums, and the urgency to seek effective approaches to address individuals’ cognitive assumptions.