Anticipating independence,no premonition of partition. The lessons of bank branch expansion on the Indian subcontinent, 1939 to 1946

We examine investment in bank branches on the Indian subcontinent in 1939 and 1946. In 1947, the states of India and Pakistan were created from the erstwhile colony of British India. Partition was destabilizing to both economies. We use branch expansion as a proxy for entrepreneur's pre‐partition predictions of the future of these regions. Our results indicate there were no premonitions of economic dislocation. Banks tended to deepen their presence in regions which were already developed. But controlling for the level of 1931 development, branch placement was highest in exactly those regions, Bengal and the Punjab, which were to experience the greatest negative consequences from political division. After 1947, multiple banks failed; most failing banks were registered in the Punjab or Bengal region. In United India, businessmen saw as much promise in regions which were to become Pakistan as in regions which were to become India. After partition, the Pakistan regions were immediately more economically fragile. This event provides a general lesson. Economic integration had intensified over the years of British rule. The abrupt stop to integration harmed especially the smaller, less diversified region. Politicians should be wary of politically dividing regions which have evolved to function as integrated economic units.     

The nature of informal food bazaars: Empirical results for Urban Hanoi,Vietnam

This paper aims to study the interesting phenomenon of informal food markets in urban areas, which have been neglected in the past research. Based on an empirical study of consumer choice between informal and formal markets (markets built-up by street hawkers vs. government-planned markets), this paper provides a basis for understanding the nature of informal markets in the Vietnamese context. The results show that cheap price and convenience (proximity) are important in shaping the choice by consumers for informal markets for food, while close relationship with sellers or services provided by sellers are not. Shoppers with higher concern for freshness and safety of fresh food are more likely to shop at formal markets. Additionally, low-income shoppers are found significantly inclined toward informal markets, while higher-income shoppers tend to shop at formal markets. Therefore, these two types of market should be viewed as two marketplaces to serve two segments of consumer groups, rather than two markets competing for a share of the business.     

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On Opposition to Rent Seeking: Implications for Developing Countries

A model is developed to study the implications of the presence of rent-opposing activities for the measurement of deadweight losses and for cost–benefit analysis. The analysis provides an upper bound on the social cost of rent-seeking in the presence of potential rent-opposers. Remarks are offered on the interactions between merits and skills in the determination of success in rent-seeking, and on the pervasiness of corruption in developing economies.     

Informal Credit,Usury, or Support? A Case Study for Vietnam

The informal credit market remains an important source of finance for the poor in Vietnam. Yet, little if anything is known about the impact of informal loans on poverty and inequality, and the Vietnamese government has no policies towards the informal credit market. In the present study paper, we found that the effect of credit from friends and relatives on per capita expenditure is positive but not statistically significant. Meanwhile, the effect of credit from private moneylenders on per capita expenditure is positive and statistically significant. Borrowing from private moneylenders increases per capita expenditure of households by around 15%. Further, it reduced the poverty incidence of borrowers by around 8.5 percentage points in 2006 and significantly decreases the poverty gap index and the poverty‐severity index. Borrowing from private moneylenders also reduces expenditure inequality, albeit at a very small magnitude.     

Elections,political competition and bank failure

We exploit exogenous variation in the scheduling of gubernatorial elections to study the timing of bank failure in the US. Using hazard analysis, we show that bank failure is about 45% less likely in the year leading up to an election. Political control (i.e., lack of competition) can explain all of this average election year fall in the hazard rate. In particular, we show that the reduction in hazard rate doubles in magnitude for banks operating in states where the governor has simultaneous control of the upper and lower houses of the state legislature (i.e., complete control) heading into an election.     

Does microcredit reduce the gender gap in employment? Evidence from Egypt

In Egypt, there is a remarkable gap between men's and women's participation in the labour market. In this study, we examine the impact of microcredit on the labour supply of men and women and subsequently investigate whether microcredit can reduce the employment gap between men and women in Egypt. We find a negative effect of microcredit on men's employment, but a positive effect on the employment of women. Borrowing from a microcredit source increases the probability of women working by 8.5 percentage points and mainly affects self‐employed work. We also find a positive effect of microcredit on work in small businesses. This finding suggests that women can use microcredit to open small shops or household businesses. Finally, using decomposition analysis, we find that microcredit reduces the overall employment gap between men and women by 0.743%.