Essays on development finance
Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2008.
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| Format: | Thesis |
| Language: | eng |
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Massachusetts Institute of Technology
2009
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| Online Access: | http://hdl.handle.net/1721.1/45906 |
| _version_ | 1826210746050019328 |
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| author | Fischer, Gregory M. (Gregory Mark) |
| author2 | Esther Duflo and Abhijit Banerjee. |
| author_facet | Esther Duflo and Abhijit Banerjee. Fischer, Gregory M. (Gregory Mark) |
| author_sort | Fischer, Gregory M. (Gregory Mark) |
| collection | MIT |
| description | Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2008. |
| first_indexed | 2024-09-23T14:55:03Z |
| format | Thesis |
| id | mit-1721.1/45906 |
| institution | Massachusetts Institute of Technology |
| language | eng |
| last_indexed | 2024-09-23T14:55:03Z |
| publishDate | 2009 |
| publisher | Massachusetts Institute of Technology |
| record_format | dspace |
| spelling | mit-1721.1/459062019-04-11T13:19:18Z Essays on development finance Fischer, Gregory M. (Gregory Mark) Esther Duflo and Abhijit Banerjee. Massachusetts Institute of Technology. Dept. of Economics. Massachusetts Institute of Technology. Dept. of Economics. Economics. Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2008. Includes bibliographical references. This thesis consists of three essays that examine investment choices in less developed countries. Chapter 1 examines how the structure of existing microfinance contracts may discourage risky but high-expected return investments. I develop a theory that unifies models of investment choice, informal insurance, and formal financial contracts and test the predictions using a series of experiments with Indian microfinance clients. The experiments confirm that borrowers free-ride on their partners, making risky investments without compensating partners for this risk, and that the addition of peer-monitoring overcompensates, leading to sharp reductions in risk-taking and profitability. However, the theoretical prediction that group lending will crowd out informal insurance is not borne out by experimental evidence. While observed levels of informal insurance fall well short of the constrained Pareto frontier under both individual and joint liability, joint liability increases observed insurance transfers. Equity-like financing overcomes both of these inefficiencies and merits further testing in the field. Chapter 2 investigates the relationship between inflation uncertainty and the investment decisions of small, microfinance-funded firms in the Dominican Republic. Using loanlevel panel data from microfinance borrowers in the Dominican Republic, I find that periods of increased inflation uncertainty were associated with substantially lower investments in fixed assets and reduced business growth. This finding is robust to specifications controlling for other forms of systemic risk and aggregate economic activity, suggesting inflation uncertainty creates potentially large distortions to the investment decisions of poor entrepreneurs. (cont.) Chapter 3, co-authored with my advisor, Esther Duflo, turns to investment behavior for public goods. This paper proposes and implements a test of local government efficiency by using a policy in India that set aside leadership positions in local governments to members of disadvantaged minority groups. If local governments are efficient, even if they discriminate against minority groups by supplying fewer public goods, they should still supply the public goods that minority groups value most. We find that when leadership positions are reserved for disadvantaged minorities, hamlets in which these minorities live receive a greater allocation of public goods. Moreover, we find suggestive evidence that this increase in public goods in minority hamlets is not proportional to the distribution of goods when the leadership position is unreserved, suggesting that in the absence of reservation, local governments do not efficiently respond to the minority group's preferences. by Gregory M. Fischer. Ph.D. 2009-06-30T16:35:14Z 2009-06-30T16:35:14Z 2008 2008 Thesis http://hdl.handle.net/1721.1/45906 320531214 eng M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission. http://dspace.mit.edu/handle/1721.1/7582 159 p. application/pdf Massachusetts Institute of Technology |
| spellingShingle | Economics. Fischer, Gregory M. (Gregory Mark) Essays on development finance |
| title | Essays on development finance |
| title_full | Essays on development finance |
| title_fullStr | Essays on development finance |
| title_full_unstemmed | Essays on development finance |
| title_short | Essays on development finance |
| title_sort | essays on development finance |
| topic | Economics. |
| url | http://hdl.handle.net/1721.1/45906 |
| work_keys_str_mv | AT fischergregorymgregorymark essaysondevelopmentfinance |