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Category Archives: G28

Financial Inclusion and Women’s Economic Empowerment in India

By Nehal Jain

Abstract
On August 14th, 2014 India’s Prime Minister Narendra Modi implemented the largest ever
financial inclusion scheme to date known as Pradhan Mantri Jan Dhan Yojana (PMJDY). The
program aimed to bank all of India’s unbanked population. Prior to the program, India had one of
the highest rates of unbanked citizens. The program also included measures that prioritized women’s
access to these financial institutions given the gender gap in financial inclusivity. This paper aims
both to understand the effectiveness of PMJDY on granting women equal access as men to financial
institutions and whether financial inclusion results in increased economic empowerment, I find that
PMJDY was successful in increasing access to bank accounts and separately, that access to bank
accounts economically empowers women.

Pengpeng Xiao, Faculty Advisor
Michelle Connolly, Faculty Advisor

JEL classification: J1; G28; I31

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The Hidden Costs of Central Bank Borrowing

By Shane Hunt

This paper explores a previously overlooked unintended consequence of a private bank accepting Central Bank loans as a lender of last resort. Applying the basic Markowitz Security Model, I explore the potential effect of a private bank accepting a Central Bank loan as a signal of increased risk of investment in that private bank to the private markets. Finding a possibility that private investors will charge a penalty risk premium for having sought Central Bank financing, I consider the effects of this premium in three different game theoretic scenarios, each with a different set of assumptions that could apply in different Economic settings. Depending on the specific environment, possible effects include dependence on Central Bank financing, bankruptcy, or an eventual return to the private financial markets for future funding.

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Advisor: Marjorie McElroy, Nir Jaimovich | JEL Codes: E58, G02, G21, G28, G32 | Tagged: Banking, Central Banking, Finance

Taming the Dragon: The Modernization of the Chinese Equity Markets and its Effects on IPO Underpricing

By William Benesh

The extreme underpricing of Chinese Initial Public Offerings in the early days of the Chinese equity markets was reduced by several reforms instituted by the Chinese government from around 2000 to 2002. These reforms reduced 1-day returns on IPOs from 295% to 72%. The reforms reduced IPO underpricing by decreasing the inequality between IPO supply and demand. These reforms, while announced between 2000 and 2002, likely took until around 2004 to take full effect. In addition to inequality between supply and demand, other factors such as information asymmetry and government/quality signaling contributed to underpricing both before and after the reforms.

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JEL Codes: G14, G15, G28, G30 | Tagged: China, Initial Public Offerings, Regulation, Stock Markets, Underpricing

 

 

 

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