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Blaze of Distrust: The Impact of Wildfires on Social Capital and Governance in Brazilian Amazonia
by Feishi “Alicia” Gong
Abstract
The 2019 wildfire crisis in Brazilian Amazonia not only captured global headlines but also deeply influenced public sentiment towards environmental and political challenges within the country. Trust, a pivotal element of social capital, plays a vital role in shaping a nation’s progress and the well-being of its citizens. This study employs detailed satellite data on wildfire occurrences and survey data reflecting Brazilian public opinion to investigate the nature of fire activity in Brazilian Amazonia, treating it as indicative of organized criminal behavior. Further, it delves into the ramifications of wildfires on the institutional and interpersonal trust of Brazilians. Our findings reveal that wildfires exert a considerable detrimental impact on the trust that local residents place in institutions and each other. These insights underscore the urgency of enhancing environmental protection measures and wildfire management strategies. By doing so, Brazil can bolster its social capital and empower local governments to rebuild and maintain public trust effectively.
Professor Michelle Connolly, Faculty Advisor
JEL Codes: H70, Q23, Q51
Social Capital and Financial Development after Economic Shocks: Evidence from Italy after the Financial Crisis of 2007-2009
By Sujay Rao & Ethan Lampert
Like traditional forms of capital, social capital – an intangible measure of an individual’s social networks, trust in institutions, and participation in civic life – has implications for personal and financial behavior. Individuals from educated, well established backgrounds with fruitful family ties may be more amenable to opening new lines of credit or investing in stock markets due to their trust in and connectedness with society. But what happens after a major economic shock, such as the financial crisis of 2008? Using Italy as a case study and panel data from the Survey of Household Income and Wealth, we find that social capital has significant effects on an individual’s credit card usage, informal borrowing, and choice to invest in securities.
Advisors: Professor Grace Kim, Professor Michelle Connolly, Professor Giovanni Zanalda | JEL Codes: G01, G2, O1, D1, D14
The Impact of Population Mobility on repayment Rates in Microfinance Institutions
By Allison Vernerey and Johan Hörnell
Several studies have attempted to model the determinants of repayment rates for group-based loans administered by micro-finance institutions (MFIs). One of the main variables that have been identifies as playing a role in determining the repayment rate is social capital. Empirical research however has struggled with quantifying this qualitative variable, resulting in vast inconsistencies across studies, aggravating cross-comparison and objective interpretation. Instead, we argue that the use of quantitative, cross-country comparable proxy that is intuitively linked to social capital would yield more consistent and reliable results. We hypothesize that population mobility is such a proxy, and that lower population mobility correlates positively with higher social capital and thus higher repayment rates. Using population mobility as a proxy for social capital would allow MFIs to lower their cost of data collection for performance assessments and simplify the process for policy makers trying to evaluate the programs success. At the village level, we find significant evidence that higher emigration within a community is strongly linked to lower repayment rates in micro-finance. These results provide micro-finance institutions with a new and more cost effective way to monitor their performance as well as improve their capacity to make well-informed lending decisions.
Advisors: Genna Miller, Kent Kimbrough | JEL Codes: G, G2, G21 | Tagged: Bangladash, Microfinance Institutions, Population Mobility, Repayment Rates, Social Capital
