Dissertations / Theses on the topic 'Financial crises – Government policy – Europe'

Defence date: 13 June 2019
Examining Board: Prof. Hanspeter Kriesi, European University Institute (Supervisor); Prof. Elias Dinas, European University Institute; Prof. Eva Anduiza, Universitat Autònoma de Barcelona; Prof. Kenneth M. Roberts, Duke University
The Great Recession constituted a breaking point in several aspects of the cultural, economic and political life of southern European countries (i.e. Greece, Italy, Portugal and Spain). This dissertation aims to shed light on the political consequences of the economic crisis in this region —with a specific focus on Spain as a paradigmatic case— by analysing different aspects of the political transformations that took place during the period of crisis. The underlying argument is that, albeit some relevant differences, the four countries experienced a common pattern: the incapacity of national politics to offer differentiated recipes to the deteriorating economic situation triggered a widespread crisis of representation that introduced new issues in the political agenda and drove the political transformations in these countries. The combination of a political and economic crisis at the national and European levels opened new political spaces that new parties capitalised by appealing to the need for democratic renewal and opposition to austerity politics. Furthermore, as illustrated by the Spanish case, and in particular the Catalan experience, the political crisis had far-reaching consequences beyond economic grievances, leading to the activation of different types of conflicts. Overall, the findings suggest that the transformations in the structure of political conflict in southern Europe in the aftermath of the Great Recession are not the by-product of a growing cultural divide —as is the case in several other continental and north-European countries—, but instead respond to the loss of credibility in the political system. Methodologically, the dissertation relies on an original dataset of media content as well as on several sources of survey data to test the empirical validity of the claims.
Chapter 2 'From Boom to Bust : A Comparative Analysis of Greece and Spain under Austerity' of the PhD thesis draws upon an earlier version published as chapter 'From boom to bust : a comparative analysis of Greece and Spain under austerity' (2018) in the book Living under austerity : Greek society in crisis.
Chapter 3 'Old versus new politics: The political spaces in Southern Europe in times of crisis' of the PhD thesis draws upon an earlier version published as an article 'Old versus new politics : the political spaces in Southern Europe in times of crises' (2018) in the journal 'Party politics'
Chapter 4 'Out with the Old: Restructuring Spanish Politics' of the PhD thesis draws upon an earlier version published as an article 'Challenging business as usual? : the rise of new parties in Spain in times of crisis' (2017) in the journal 'West European politics'

The study sought to evaluate debt management policy implementation towards revenue management in government leased properties of the Eastern Cape Provincial Treasury at the Transkei Development and Reserve Fund. Secondly, the study aimed at developing a tool for assisting policy-makers and officials involved in debt management and revenue collection. In order to address the research problem, a case study involving randomly selected 27 employees from the Eastern Cape Provincial Treasury and housing ward committee members was adopted. Self-administered questionnaires and interviews were the two data collection techniques utilised. All participants were involved in the study during tea and lunch breaks at the workplace; this constituted the employees’ natural environment. Both quantitative and qualitative designs were utilised in analysing data. Descriptive statistical analysis using excel was utilised to summarise the responses, analyse the demographic profiles of participants and their responses. The results were thus presented in the form of bar charts. Responses which could not be analysed using statistics were analysed qualitatively thus the advantages inherent in the two approaches were exploited. The evidence from the study suggests that government operational employees are aware of their roles and responsibilities as they relate to debt management and debt collection policy. The development of debt management policy promotes rental collection, improve property profitability and ensure the maintenance is in place to improve attractiveness of the government properties.

In the first chapter, I analyze the impact of changes in aggregate holding in special asset purchase programs by Federal Reserve Systems (FED) as an alternate monetary policy at aggregate level. Later, to complement the analysis of monetary impact at aggregate level, I also analyze the impact of monetary actions at bank stock level with a set of 186 banks. First, for the overall sample period, expected monetary shock has positive effect on bank stock return; however, unexpected shock component has otherwise negative impact. Second, during both conventional and QE regime, monetary shocks are not significant in explaining weekly stock returns; however change in FED’s total asset holding in special programs is significant during the QE regime and such findings are more robust for the “large” banks when compared to “medium” and “small” banks. The second chapter presents the second essay that is one of the early studies to analyze whether either the changes in accounting standard or the changes in prudential regulatory regimes may affect the bank earning management in terms of Loan Loss Provisioning (LLP) systematically. Results suggest that, in general, bank managers use LLP as a tool for earning management for income smoothing and also for capital management once LLP is allowed to be a part of Tier-I capital requirement. Both changes in prudential regulation from pro-cyclic to a dynamic regime and convergence of accounting standard from rule-based to principle-based standards have significant negative fixed effects separately and jointly once included.

The view of on-site school support for curriculum delivery is shared by most countries and its effects have been felt by schools. There is fear that the Austerity Measures will negate the outcomes of the action taken by the teams that visit the schools. The reviewed literature is more biased towards the Austerity Measures in the whole government sector rather than in a department or an institution like the Education District in Idutywa. Even though the effects of Austerity Measures have been researched all over the world based on a specific country, there is deficiency of such literature done in the institution like the department of Education Districts. The researcher intends contributing to the filling of this gap by this study. The researcher therefore carried out a focused study of the effect of Department’s Austerity Measures on on-site school curriculum support in Idutywa Education District. It is also imperative to know how the teachers are affected by these departmental Austerity Measures, hence the interviews were carried out with the school personnel in addition to the District Professional staff. The District is characterised by poor performance in both Annual National Assessment (ANA) and the final National Senior Certificate results. The findings revealed that the implementation of AM have contributed to, amongst other things, the following issues: The inadequate on-site school support for curriculum delivery; The shortage of resources that includes teachers and vehicles; and ultimately the learner underperformance The researcher expect that the recommendation made will be embraced and be factored through, during the planning process of the Eastern Cape Department of Basic Education in order to improve learner performance.

Cette thèse s'intéresse aux questions d'accès aux marchés financiers dans les économies émergentes et en développement. La première partie donne un aperçu général des conséquences macroéconomiques de l'un des régimes de politique monétaire le plus favorable au marché - le ciblage d'inflation - en utilisant le cadre d'analyse de la méta-analyse. La deuxième partie analyse le risque et la stabilité des marchés obligataires des États. La troisième et dernière partie examine les effets disciplinaires résultant de la participation aux marchés obligataires souverains. Plusieurs résultats émergent. Au chapitre 1, les résultats indiquent que la littérature sur les effets macroéconomiques du ciblage d'inflation est sujette à des biais de publication. Après avoir purgé ces biais, le véritable effet du ciblage d'inflation reste statistiquement et économiquement significatif à la fois sur le niveau de l'inflation et la volatilité de la croissance économique, mais ne l’est pas sur la volatilité de l'inflation ou le taux de croissance économique réel. Aussi, les caractéristiques des études déterminent l’hétérogénéité des résultats de l'impact du ciblage d’inflation dans les études primaires. Le chapitre 2 montre que l'adoption d'un régime de ciblage d'inflation réduit le risque souverain dans les pays émergents. Cependant, cet effet varie systématiquement en fonction du cycle économique, de la politique budgétaire suivie, du niveau de développement et de la durée dans le ciblage. Le chapitre 3 montre que les envois de fonds des migrants, contrairement aux flux d'aide au développement, permettent de réduire le risque souverain. Cette réduction est plus marquée dans un pays avec un système financier moins développé, un degré d'ouverture commerciale élevé, un espace budgétaire faible et sans effet dans les pays dépendants des envois de fonds. Le chapitre 4 montre que les pays ayant des contrats d’échange sur risque de crédit sur leurs dettes sont plus sujets à des crises de dette. Il constate également que cet effet reste sensible aux caractéristiques structurelles des pays. Le chapitre 5 montre que la participation aux marchés obligataires de long terme (domestiques et internationaux) encourage les gouvernements des pays en développement à accroître leurs recettes fiscales intérieures. Il révèle également que l'effet favorable dépend du niveau des recettes de seigneuriage, d’endettement, du régime de change, du niveau de développement économique, du degré d’ouverture financière, et du développement financier. Le chapitre 6 montre que la présence de marchés obligataires domestiques, de long terme et liquides réduit considérablement le degré de dollarisation financière dans les pays en développement. Cet effet est plus important dans les pays avec un régime monétaire de ciblage d’inflation ou de change flottant, et à règles budgétaires. Enfin, il constate que la présence de marchés obligataires domestiques réduit la dollarisation financière à travers la baisse du niveau et de la variabilité de l'inflation, de la variabilité du taux de change nominal, et des revenus de seigneuriage
This thesis focuses on some critical issues of the access to international financial markets in developing and emerging market economies. The first part provides a general overview of the macroeconomic consequences of one of the most market-friendly monetary policy regime—inflation targeting—using a meta-regression analysis framework. The second part analyses government bond market risk and stability. The last part investigates the disciplining effects of government bond market participation—bond vigilantes. In Chapter 1, the results indicate that the literature of the macroeconomic effects of inflation targeting adoption is subject to publication bias. After purging the publication bias, the true effect of inflation targeting appears to be statistically and economically meaningful both on the level of inflation and the volatility of economic growth, but not statistically significant on inflation volatility or real GDP growth. Third, differences in the impact of inflation targeting found in primary studies can be explained by differences in studies characteristics including the sample characteristics, the empirical identification strategies, the choice of the control variables, inflation targeting implementation parameters, as well as the study period and some parameters related to the publication process. Chapter 2 shows that the adoption of inflation targeting regime reduces sovereign debt risk in emerging countries. However, this relative advantage of inflation targeting—compared to money or exchange rate targeting—varies systematically depending on the business cycle, the fiscal policy stance, the level of development, and the duration of countries’ experience with inflation targeting. Chapter 3 shows that remittances inflows significantly reduce bond spreads, whereas development aid does not. It also highlights that the effect of remittances on spreads arises in a regimes of lower developed financial system, higher degree of trade openness, lower fiscal space, and exclusively in non-remittances dependent regimes. Chapter 4 indicates that countries with credit default swaps contracts on their debts have a higher probability of experiencing a debt crisis, compared to countries without credit default swaps contracts. It also finds that the impact of credit default swaps initiation is sensitive to several structural characteristics including the level of economic development, the country creditworthiness at the timing of credit default swaps introduction, the public sector transparency, the central bank independence; and to the duration of countries’ experiences with credit default swaps transactions. Chapter 5 shows that bond markets participation encourages government in developing countries to increase their domestic tax revenue mobilization. Finally, it finds that bond markets participation improves the mobilization of internal taxes, compared to tax on international trade, and reduces their instability. Chapter 6 shows that the presence of domestic bond markets significantly reduces financial dollarization in domestic bond markets countries. This effect is larger for inflation targeting countries compared to non-inflation targeting countries, is apparent exclusively in a non-pegged exchange rate regime, and is larger when there is a fiscal rule that constrains the conduct of fiscal policy. Finally, it finds that the induced drop in inflation rate and its variability, nominal exchange rate variability, and seigniorage revenue are potential transmission mechanisms through which the presence of domestic bond markets reduces financial dollarization in domestic bond markets countries

Depuis les quarante dernières années, toutes les régions du monde ont été traversées par des événements majeurs d’instabilité économique et financière. L’un des traits caractéristiques de ces manifestations est qu’elles ont non seulement eu un impact sur la santé économique financière et sociale de leur pays d’origine, mais aussi sur les économies étrangères. Cette thèse retrace l’évolution de la crise financière mondiale, démontre comment la plupart des pays de l’OCDE ont été affectés par la contagion, et met en lumière le rôle de la politique monétaire dans la propagation de la crise. Elle se compose en six essais. Le premier chapitre s’attache à étudier les corrélations dynamiques entre différents actifs et certaines variables économiques et financières durant la bulle internet de 2000 et la crise financière mondiale. Dans le deuxième essai, nous nous intéressons aux changements de transmission internationale des chocs de politique monétaire américaine. Le troisième essai adopte une approche plus économique. Nous y étudions la synchronisation des cycles, la composante stochastique de la volatilité de l’inflation, du produit et des taux d’intérêts. Dans le 4ème essai, nous abordons l’existence d’un éventuel «shift-contagion» lors de la crise financière mondiale et lors de la crise de la dette souveraine en Europe. Le cinquième essai aborde la dynamique intra-journalière ainsi que la transmission de volatilité entre Allemagne, France, et Royaume-Uni lors de la crise financière mondiale. Enfin le dernier cherche à analyser la volatilité de 12 marchés d’action
Depuis les quarante dernières années, toutes les régions du monde ont été traversées par des événements majeurs d’instabilité économique et financière. L’un des traits caractéristiques de ces manifestations est qu’elles ont non seulement eu un impact sur la santé économique financière et sociale de leur pays d’origine, mais aussi sur les économies étrangères. Cette thèse retrace l’évolution de la crise financière mondiale, démontre comment la plupart des pays de l’OCDE ont été affectés par la contagion, et met en lumière le rôle de la politique monétaire dans la propagation de la crise. Elle se compose en six essais. Le premier chapitre s’attache à étudier les corrélations dynamiques entre différents actifs et certaines variables économiques et financières durant la bulle internet de 2000 et la crise financière mondiale. Dans le deuxième essai, nous nous intéressons aux changements de transmission internationale des chocs de politique monétaire américaine. Le troisième essai adopte une approche plus économique. Nous y étudions la synchronisation des cycles, la composante stochastique de la volatilité de l’inflation, du produit et des taux d’intérêts. Dans le 4ème essai, nous abordons l’existence d’un éventuel «shift-contagion» lors de la crise financière mondiale et lors de la crise de la dette souveraine en Europe. Le cinquième essai aborde la dynamique intra-journalière ainsi que la transmission de volatilité entre Allemagne, France, et Royaume-Uni lors de la crise financière mondiale. Enfin le dernier cherche à analyser la volatilité de 12 marchés d’action

Nearly four decades of the Association of Southeast Asian Nations (ASEAN)-European Union (EU) relationship have witnessed the importance of ideas and identity alongside the economic interests in shaping the behaviour of the two sides. The study takes interest in understanding the EU’s actorness and the EU as a normative actor with and within Southeast Asia through a reflectivist lens. The thesis is an attempt to provide a new perspective on a relationship commonly assessed from an economic angle. It outlines the opportunity of non-traditional security (NTS) challenges to enhance EU actorness and normative influence in Southeast Asia. Against this backdrop, the study explores the dialogue and cooperative initiatives of two regions, which attach relatively little salience to each other. The study employs a NTS lens and draws upon the case of the Asian Financial Crisis of 1997-98, the haze in relation to forest governance, the Bali bombings of 2002 and the political conflict in Aceh. The study assumes that these NTS issues can stimulate processes of threat convergence as well as threat ‘othering’. It argues that these processes enhance European engagement in Southeast Asia and contribute to shaping regional stability in Southeast Asia. Furthermore, NTS crises present situations, where norms can become unstable, contested and substituted. This allows us to better examine the EU as a normative actor. To establish an understanding of the EU’s actorness and the EU as a normative actor, the empirical evidence will focus on the threat perceptions, motivations of action and activities of the EU and its member states. For the purpose of differentiating the EU as a normative actor, the study will also include the discussion of the normative objectives and behaviours of the EU and its member states and apply a reflectivist theoretical framework. Hypothetically, NTS crises trigger external assistance and normative influence and thus, they offer an opportunity to establish a more nuanced picture of the EU in the region. At the same time, the study acknowledges that there are a variety of constraints and variables that complicate the EU’s actorness. The thesis seeks to identify and discuss these. So far, scholarly publications have failed to apply the NTS perspective systematically. This thesis provides the first monograph-length treatment of the EU in Southeast Asia through a NTS and reflectivist lens.

Defence date: 30 April 2014
Examining Board: Professor Sven Steinmo, European University Institute (Supervisor) Professor Pepper Culpepper, European University Institute Professor Peter Englund, Stockholm School of Economics Professor Gunnar Trumbull, Harvard Business School.
Do nations learn from their financial crises? In addressing this question, this dissertation explores whether politicians, supervisors and bankers change their preferences towards financial markets when they recognize they have made significant mistakes in the recent past. It also asks whether such recognition of failure leads to a process of change in rules, policies and institutions, in different national contexts. In addressing this broader theoretical question, the dissertation focuses on the mortgage credit markets in advanced capitalist economies. Challenging the conventional approaches in political science and financial economics, it shows that the longitudinal and cross-sectional variations in mortgage credit markets can best be explained with reference to nations' different experiences of financial crisis. Borrowing insights from learning theory in political economy and public policy analysis, it argues specifically that those nations (i) that had severe financial crises in their recent past and (ii) that have coordinative institutions and elites, are more likely to draw lessons from their mistakes, and to change their policies, in order to avoid similar asset bubbles and financial crises in the future. This dissertation adopts a multi-method approach in examining the role of learning in the evolution of mortgage credit markets. A significant part traces the history of mortgage credit and financial crises in three countries, from a comparative perspective. Stressing a comparison between two institutionally similar countries, Sweden and Denmark, the dissertation shows how differences in the severity of crises may yield opposite outcomes in elite perceptions toward financial stability, and how they explain the differences in policy and market outcomes. On the other hand, comparing Sweden to Britain -two countries with similar crisis history but with different institutions- it stresses the positive role of coordinative institutions and coherent elites in translating the crisis experience into actual policy and institutional change. In addition to the comparative-historical analysis, the econometric parts of dissertation show that the inferences drawn from three cases can be generalized to a sample of 19 OECD countries. The results indicate that the countries with a negative experience of financial crisis in the early 1990s are more likely to have smaller mortgage markets in comparison to other countries, and that this effect is stronger in countries with coordinative economic and policy institutions.

Defence date: 17 October 2016
Examining Board: Professor Adrienne Héritier, European University Institute (Supervisor) ; Professor Ulrich Krotz, European University Institute / RSCAS (Co-Supervisor) ; Professor Amy Verdun, University of Victoria ; Professor Lucia Quaglia, University of York
Why and how do composite actors such as states or international institutions emerge as political leaders? Moreover, once in charge, how do they influence policy or institutional change? What are the conditions for successful leadership? These questions become particularly relevant in times of crisis. However, there is no political science theory that explains the emergence and the impact of leadership when exercised by composite actors. In the context of the Eurozone crisis, we observe that neither Germany, which is the actor most frequently called upon to assume leadership, nor any of the EU’s institutional actors have emerged as leader under all circumstances. Instead, we find three different outcomes: no leadership, failed leadership, and successful leadership. This thesis develops a theoretical model to explain this variation and to address the stated gap in the literature. Building on rational-institutionalist assumptions, it argues that leaders can help a group to enhance collective action when there are no, or only incomplete, institutional rules to do so. Thus, especially in times of crisis, leaders can act as drivers of policy or institutional change. However, they emerge only if the expected benefits of leading exceed the costs of it, and if the potential followers suffer high status quo costs. A leader’s impact on the outcomes, by contrast, depends on its power resources, the distribution of preferences, and the institutional constraint. The model is applied to Germany’s role in the first financial assistance to Greece, the proposal to establish a so-called ‘super-commissioner’, and the shaping of the Fiscal Compact. Moreover, the attitude of the European Commission and the European Parliament towards the issue of Eurobonds as well as the European Central Bank’s launch of the Outright Monetary Transactions are analysed on the basis of congruence tests and rigorous process-tracing. These within-case analyses are complemented by a cross-case comparison in order to enhance the external validity of the results. The analysis draws on 35 semi-structured élite interviews conducted at the German Ministry of Finance, the European Central Bank, the European Commission, the Council of the European Union, the European Parliament, and two Permanent Representations in Brussels.

Defence date: 20 November 2015
Examining Board: Professor Russell Cooper, Penn State University, Supervisor; Professor Elena Carletti, EUI & Bocconi University; Professor Yan Bai, University of Rochester; Professor Alexander Guembel, Toulouse School of Economics
This thesis consists of two chapters exploring how even benevolent governments may struggle to convince their citizens that they will stick to the policies that ensure the best outcomes in equilibrium. If people believe that the government will optimally choose a different policy in the event of a crisis, their reaction to that belief may in fact bring about just such a crisis. This thesis investigates the circumstances in which these kinds of commitment problems can be overcome. The first chapter is on bank resolution, where the choice between resolving insolvent banks and bailing them out creates a time inconsistency problem. To deter banks from taking excessive risks, governments want to convince them that they will choose resolution. However, when facing the costs of liquidating banks, governments may be tempted to bail them out instead. By strengthening their bank resolution regimes, governments reduce these costs, thus credibly committing themselves to choosing resolution over bailouts. Governments with greater resources face a more severe commitment problem. When banks interact strategically, improving the resolution regime can eliminate equilibria in which they coordinate on risky investment strategies. In the second chapter, Antoine Camous and I present a theory linking the cyclicality of fiscal policy to inherited public debt. When debt is low, fiscal policy is countercyclical, in the sense that the government responds to reductions in output by cutting the tax rate. Above a threshold level of debt, however, optimal fiscal policy becomes procyclical. This creates the possibility of self-fulfilling crises, in which output is low because workers expect high taxes, and the government sets high taxes because output is low. Our model suggests why highly indebted governments might implement procyclical fiscal policy during recessions, even without facing high sovereign risk premia.

JEL Classification: G14, G18
I investigate the effects of the European Central Bank monetary policy over the European government bonds market. To obtain the instantaneous reactions of government bonds, I use event studies to evaluate the impact of changes on monetary policy – the events – over the cumulative average abnormal return of bond yields. I conclude that the European Central Bank monetary policy did have significant effects on Euro-zone government bonds and other European countries. Among eight countries, the German 5-year government bonds were the most responsive to the events. On the other hand, the United Kingdom, which does not belong to the Euro-zone, was the least responsive. I also find that the event with the strongest impact on the bond markets is the announcement of 4th September 2014. Most of bond yields show significant reactions on the day after the announcement date, but the 5-year government bonds is affected much more than the 10-year government bonds.
Investigamos o efeito da decisão da política monetária do Banco Central Europeu em relação aos principais ajustes das taxas de juros no mercado de obrigações governamentais em vários países da União Europeia. Para obter as respostas instantâneas dos títulos do governo, é utilizado o Estudo de Eventos para avaliar o impacto das decisões através do retorno anormal médio acumulado das taxas de rendibilidade das obrigações. O estudo consegui que a política monetária do BCE teve um efeito significativo nos títulos do governo da zona do euro e não só. A maturidade de cinco anos da Alemanha revelou ser o mais sensível aos eventos entre oito países analisados. Por seu turno, o Reino Unido, país fora da zona Euro, foi aquele cujas obrigações menos reagiram. O estudo confirma um impacto mais relevante sobre as obrigações governamentais relativamente ao anúncio da decisão de 4 de setembro de 2014. A maior parte dos rendimentos das obrigações apresentou reações significativas no dia seguinte à data do anúncio, mas as obrigações a cinco anos revelaram ser mais afetadas do que as a 10 anos.

M.Com. (Financial Economics)
This paper studies the efficacy of bank bailouts in restoring financial stability during financial crises. Stability is measured in terms of stock market volatility. The volatility dynamics associated with banking crises in South Korea, Malaysia, Indonesia, Thailand, and the United States (US) are investigated. Using daily returns data from 1 January 1997 to 8 October 2012, two specific methods are used to measure the impact of bailouts on financial stability. Firstly, dummy variables that account for the timing of bailout policies are included in the variance equation of Exponential Generalised Autoregressive Conditional Hetereoskedasticity (EGARCH) models that are estimated for the overall stock market index of each of the affected countries. Secondly, EGARCH models are estimated using 30-day rolling windows in order to control for shifts in unconditional volatility that may result from bailouts. The Spearman Rank-Order correlation test is used to assess the rank-order relationship between the EGARCH 30-day rolling window conditional volatility and actual volatility, which is estimated as a 30-day moving average of squared returns. Three main findings form the conclusion of this study. The first is that, in some cases, bailouts are successful in reducing volatility in some of the East Asian and US stock markets. Secondly, although the creation of centralised asset management companies and the implementation of guarantees of liabilities as bailout policies are effective at reducing volatility in the East Asian markets, closures of, and interventions in, banks and other financial institutions, liquidity support, and capital support are not effective in reducing volatility in the East Asian markets. This illustrates that different bailout policies have different impacts on volatility. Finally, although bailout policies reduce volatility, liquidity support, and capital support, bailout policies are more effective at reducing volatility in the United States than in the East Asian countries. This illustrates that the same bailout policies cannot be used in different types of economies, namely developed and developing economies, with the hope of the same outcome being realized.

Defence date: 4 February 2016
Examining Board: Professor Elena Carletti, Bocconi University and EUI, Supervisor; Professor Evi Pappa, EUI; Professor Luca Deidda, Universita’ di Sassari; Professor Wilko Bolt, Dutch Central Bank.
This thesis is a nexus of three topics; financial stability, banking regulation and financial influence. In four separate chapters, this work examines how financial institutions interact with their regulators, in particular after the financial crisis of 2008. Size, incentives, guarantees, moral hazard, treatment, capture and influence play an important role in the analysis. The first chapter focusses on the relation between bank size and support, confirming the hypothesis that bank size is positively related to support ratings. It also finds evidence that the effect is non-linear, confirming the ‘too-big-to-rescue’ theory. Chapter two tests whether the expectation of individual and systemic government support induces moral hazard. It shows that banks tend to be more leveraged, funded with capital of lower quality, more heavily invested in risky assets and exposed to more severe liquidity mismatch when they are perceived as being more likely to benefit from government support. In the last two chapters the focus is shifted to banks’ political activities and connections. Both chapters leverage a unique dataset that links U.S. banks’ sources of influence (e.g., lobbying expenditures, proximity to the relevant legislative committee, prior affiliation with regulatory or government institutions) to bank financial data, actual bank supervisory actions, and market-inferred expected government support. The findings in chapter three suggest that banks’ political influence indeed matters for the regulatory treatment of distressed banks, as well as for the expectation of support regardless of bank distress. Chapter four further dives into determinants of bank lobbying, and explores whether political connections and risk taking influence the decision to lobby. In combination, these findings are instructive for understanding the political landscape surrounding banks and their regulators. It also helps us to have a broader understanding of what drives government support to banks, and how in turn that support can trigger moral hazard within banks.

Governments play a key role in modern economies. However, modern-day governments face several challenges that limit their functioning. Some examples include inadequate conduct of elections, tax evasion, and market failures. Each chapter in this thesis explores a key challenge faced by government and policy intervention that helps address it. Chapter 1 explores the poor turnout of women in India and tests whether increasing security at the polling booths increases women's representation. Chapter 2 explores the role of tax evasion by firms in low revenue collection under a Value Added Tax (VAT) in India. Chapter 3 examines the current housing crisis in major cities across the United States and evaluates the effects of tax incentives designed to encourage new residential investment. To provide robust causal evidence, I use natural experiments combined with novel microdata. Chapter 1 uses a regression discontinuity design arising from the rule used to assign security measures to polling booths during a major state election in India. In particular, polling booths which received more than 75% of votes in favor of one candidate in the previous election received security measures with a higher probability. I use the regression discontinuity design to estimate effects on women's share in total turnout and political outcomes. Chapter 2 uses the staggered roll-out of VAT across states in India to estimate the effect of VAT adoption on vertical integration in firms. Chapter 3 uses a natural experiment in New York City where a delayed implementation of the property tax increase on new construction led to a short-term boom in residential investment as developers rushed to claim expiring tax benefits. I estimate effects on nearby rents, demographics, businesses. The end result is a set of robust policy conclusions. Chapter 1 finds that strengthening security at the polling booths increased women's turnout, which in turn had consequences for political outcomes. For instance, suggestive evidence indicates that non-incumbent and educated candidates received more votes whereas corrupt candidates received fewer votes. Chapter 2 finds that firms integrated vertically to evade taxes under a Value Added Tax. This suggests that low revenue collection in developing countries is possibly a combination of both evasion and real production response of firms. Chapter 3 finds that new tax-exempt residential investment increased rents in existing buildings within 150 meters. This happened because new building attracted high-income residents who increased demand for local businesses, reflected in the entry of businesses that cater to high-income residents. The result highlights potential negative spillover effects of new construction on incumbent low-income residents and suggests that optimal tax policy must incorporate such spillovers when designing incentives that encourage investment.