Essays in financial economics

Defence date: 25 October 2022Examining Board: Prof. Piero Gottardi, (Eropean University Institute and University of Essex, supervisor); Prof. Giacomo Calzolari, (European University Institute, co-supervisor); Prof. Martina Jasova, (Columbia University); Prof. Todd Keister, (Rutgers University)This dissertation consists of three independent chapters that each shed light on a particular aspect of the banking sector. The first chapter is joint work with Agostino Capponi and Joseph E. Stiglitz (both of Columbia University), and it is motivated by the fact that banks usually hold large amounts of domestic debt which makes them vulnerable to their own sovereign’s default risk. At the same time, governments often resort to costly bailouts when their banking sector is in trouble. We investigate how the network structure and the distribution of sovereign debt ownership within the banking sector jointly affect the optimal bailout policy under this “doom loop”. We argue that rescuing banks with high domestic sovereign exposure is optimal if these banks are sufficiently central, even though that requires larger bailout expenditures than rescuing otherwise identical low-exposure banks. Our model illustrates how the “doom loop” exacerbates the “too interconnected to fail” problem. The second chapter, written jointly with Melina Papoutsi (European Central Bank), studies potential side-effects of large exposure disclosure requirements for banks. Banks in the euro area must inform banking supervisors about exposures to individual counterparties that exceed 10% of the bank’s capital. Using a new granular dataset that combines banks’ loan and security exposures, we employ a Regression Discontinuity (RD) model to test whether banks pass on the cost of complying with the large exposures framework to borrowers above the threshold in the form of higher interest rates. We find no statistically significant evidence of bunching of exposures below the threshold, but we present preliminary evidence in support of a sizable interest rate premium for large exposures. Our results suggest that, ceteris paribus, when a firm becomes a large exposure for its bank, its interest rate increases by 6–8 basis points on average, which implies an increase in interest cost for the average loan of 3.5–4.5%. The third chapter investigates the nature of the constraints banks face in extending their balance sheet to originate loans. Many papers in the banking and finance literature (and even more so in macroeconomics) either postulate or empirically find a positive causal link between banks’ deposit and loan growth. A naive interpretation of this result is that deposit inflows increase the amount of funds available to a bank for lending purposes and therefore trigger additional lending. However, this interpretation is at odds with banks’ ability to create money-like liabilities at will. This paper argues that if an inflow of deposits triggers additional lending, it must be because it relaxes some previously binding constraint. Otherwise, the bank could just as well have increased lending in the absence of deposit inflows. In this paper, I empirically explore three possible channels that could explain the observed positive relation between deposit and loan growth: Relaxation of either (a) a dynamic leverage constraint, (b) a dynamic liquidity constraint, and (c) a “hot potato effect”.-- 1. Optimal Bailouts and the Doom Loop with a Financial Network -- 2. Bank Behavior Around Large Exposure Thresholds -- 3. What Constrains Bank Lending? -- Bibliography -- Appendices -- A. Graphical Illustration and the Tax Capacity Function -- B. Bailout Space: Comparative Statics -- C. Proofs -- D. Assumption on Spectral Radius -- E. Algorithm to Find Equilibria with Optimal Bailouts -- F. Alternative Bandwidths -- G. Additional Material on Aggregate Loan and Deposit Growt

The long 1968 in Hungary and Romania

Defence date: 25 February 2022Examining Board: Prof. Alexander Etkind (European University Institute); Prof.Federico Romero (European University Institute); Prof. Constantin Iordachi (Central European University); Prof. Juliane Fürst (Leibniz Centre of Contemporary History ZZF)The sixties witnessed many youth unrests across the globe. Compared to previous decades, a distinctive decisional category emerged: youth. They gained a central role by defining themselves in opposition to other generations and perceiving themselves as a unique one with a purpose to change history through ‘revolution’. At the same time, the youngsters considered themselves to belong to a movement that transcended their local city, the national borders, and ideological barriers. Yet, there were different ways to express the discontent against the values of the ‘gerontocracy’. This dissertation creates a local, regional, and comparative analysis of the history of sixty-eighters from Hungary and Romania. It will focus on their childhood experiences and on the impact of political decisions. A significant determinant was the cultural and psychological background of each of the protagonists. The group cohesion and the cultural and psychological background of each protagonist determined their protest tactics. Some youngsters were not interested in politics, but the state considered their activities, such as listening to Radio Free Europe or playing in a rock band to be a threat. A variety of cultural genres were involved in this process: music was an essential component of the late 1960s, which had a notable role in challenging the Establishment. Thus, another line of inquiry will explain how musicians and artists used different protest expressions, such as Maoism, rock music, or ‘passive resistance' as protest tactics. The relationship between artists and the state was not always an oppositional one. Instead, this project will use James Scott’s concepts of infrapolitics and hidden transcripts to show there was always a negotiation and a compromise between various networks.Chapter 5 ‘Ultra-Leftist Revolution in Hungary' of the PhD thesis draws upon an earlier version published as chapter '‘The long 1968’ in Hungary and its legacy' (2019) in the book ‘Unsettled 1968 in the troubled present revisiting the 50 years of discussions from east and central Europe’The introduction of the PhD thesis draws upon an earlier version published as an article 'Eastern-European 1968s?' (2019) in the journal ‘Review of international American studies’Chapter 1 ‘The Childhood of a Generation' of the PhD thesis draws upon an earlier version published as an article 'The pre-history of Hungarian and Romanian 1968ers' (2020) in the journal ‘Wroclaw yearbook of oral history

William Temple’s political and economic thought : a restoration view of consequences of human nature, 1660–1699

Defence date: 14 February 2022Examining Board: Professor Ann Thomson (EUI) ; Professor Regina Grafe (EUI) ; Professor Charles-Édouard Levillain (Université Paris Diderot) ; Professor Philipp R. Rössner (University of Manchester)This thesis focuses on the political and economic thought the seventeenth century diplomat and author William Temple (1628–1699). His works have previously been analysed mainly from the point of view of literary studies, diplomatic history. What is missing is a work dissecting his views on human nature and the consequences of that view on his political and economic thought. Using Temple’s published works as my sources, my aim is to show what Temple was trying to do with his views of human nature in particular, and how these views affected his political and economic perspectives. This thesis shows, that Temple was trying to convince not only of political elite but also the general public. This thesis is structured around two specific research questions: 1) which elements make up Temple’s political and economic ideas? and 2) what was Temple trying to with his ideas of human nature and how did it affect his political and economic thought? I have chosen to answer these questions with two independent but intertwined themes: 1) Temple’s view of human nature and 2) the consequences of human nature unto his political and economic thought. Both themes break into smaller categories which are analysed as their own entities. My main aim is to show that Temple maintained that due to human nature change was inevitable, and he tried to find ways to support and defend the existing society but also prepare it for change. As a result Temple tried to not only to manage and control change but also to embrace change. In the political sphere he wished to establish and maintain a structure that allowed people to act on policy according to their motivations, but ensure that structures themselves would remain untouched. He used the sphere of economy in two different manners: it was to accumulate wealth for polity but also to serve as a diversion from political activity

Adaptive and symbiotic : regulation at the boundaries of administrative law

Defence date: 14 July 2022Examining Board: Deirdre Curtin, Supervisor, (EUI); Joanne Scott, (EUI); Javier Barnes, (Universidad de Huelva/UPF); Joana Mendes, (University of Luxembourg)The revised version of the PDF of 2023 contains the author acknowledgements.In the context of a reconfigured public-private regulatory landscape, this thesis analyses, through the lenses of administrative law, regulatory activities with a public law impact. It critically assesses whether those activities are performed by non-state regulators in compliance with administrative law principles that are required for this kind of activity when performed by a public regulator. It proposes a tailored use of administrative law principles as public law control for such regulatory activities. Three separate levels of engagement with regulation are pin-pointed. First, the movement from private actors internalizing a public logic in regulation to private actors performing as regulation shapers; second, the progression from administrative law principles applied to public regulation to administrative law-like principles applied in non-conventional forms of regulation; third, the evolution from a preeminently subject-centered logic in administrative law to an increase in the use of a functional logic. These underlying trajectories will be demonstrated through three different examples of non-conventional forms of regulation: regulation through information, regulation through standards and regulation through professional codes. The presence of administrative law principles in these examples of non-conventional forms of regulation will be analysed with a focus on whether and how they contribute to governing the relationship between these non-conventional regulators and citizens. This work is structured as follows. Chapters two and three analyse administrative laws adaptative capacity, in domestic and beyond the state settings, respectively, providing the theoretical framework for administrative law. Chapter two will show how administrative law has developed in different national contexts to adapt to new phenomena over time. The adaptative capacity of administrative law will become more evident in chapter three in relation to new phenomena beyond the state, where nonstate actors are emerging as more relevant in regulatory and governance areas. Chapter four provides a theoretical framework for regulation and analyses it in relation to administrative law as portrayed in previous chapters. This chapter attempts to understand what is meant by regulation in the context presented in previous chapters. Chapter five presents three examples that illustrate the interplay between private and public rule-makers at different levels as well as the concerns that may arise from a public law point of view

Europeanisation à la carte : negotiating Spanish accession to the European community, 1979-1985

Defence date: 26 March 2022Examining Board : Professor Federico Romero, (European University Institute); Professor Glenda Sluga, (European University Institute); Professor Fernando Guirao, (Pompeu Fabra University); Professor N. Piers Ludlow, (London School of Economics and Political Science)This thesis investigates the negotiations over Spanish accession to the European Community, which ran from 1979 to 1985. It focuses on the economic dimension of membership negotiations and explores three economic sectors (industry, fisheries, and agriculture). By adopting this approach, this thesis aims to go beyond purely political perspectives which have predominated in the literature. In doing so, this doctoral dissertation challenges traditional accounts of how Spain joined the EC. These accounts focus on the political meaning of the enlargement toward a newly established democratic country and the diplomatic disputes over the intra-Community agro-budgetary issues, which are traditionally portrayed as the main reason behind delays in achieving the overall political objective of securing the Spanish democracy through the EC membership. Instead, this thesis shows a much more complex account in which both parties struggled to Europeanise Spain according to their material interests, and often contrary to the public discourses coming from the main actors at the time. The Community made efforts to force Spain to open its highly protected industrial market, to discipline the large and disobedient Spanish fishing fleet, and to postpone Spanish incorporation into the Common Agricultural Policy and Common Fisheries Policy. At the same time, Spanish governments were reluctant to Europeanise Spain’s economy by prioritising short-term benefits of maintaining the status quo over taking painful but necessary measures. Finally, this thesis sheds new light on the Community-Spain relations during the first half of the 1980s, the role of Spain within the EC’s southern enlargement, and the way that Spain transitioned from an authoritarian regime with a protected domestic economy to a democratic system with an economic structure comparable to other Western European states

Regulating investment capitalism : an ethnography of Fintech

Defence date: 28 November 2022Examining Board: Professor Hans-Wolfgang Micklitz, (European University Institute, supervisor); Professor Olha Cherednychenko, (University of Groningen); Professor Mathias Siems, (European University Institute); Professor Yane Svetiev, (The University of Sydney)Fintech, a portmanteau of finance and technology, as such is not a novelty in finance. The most recent, post- Global Financial Crisis (GFC) however has led to the emergence of new entities within the financial system- Fintech companies. Fintech firms develop technology-based solutions to bring innovation and new technologies to financial system. Their influence on the financial sector has been huge, and is constantly growing due to continuous increase in private investments within the sector, as well as Fintechfriendly regulation. The EU Fintech policy-making has been no different in this regard-it has been created with the objective of accelerating growth and enabling innovation within the financial sector, in addition to traditional financial markets’ regulatory objectives. Moreover, when addressing risks, the EU Fintech framework has followed an activity-based principle (“same activity-same risks-same regulation”). Such approach, however, seems not to be fully adequate for Fintech due to its distinctiveness within the financial system. The thesis thus examines whether or not the existing EU regulatory framework is tailored to the particularities of Fintech. To answer the question, the thesis develops a multidimensional understanding of Fintech. It first provides findings of an extensive desk research that discuss how Fintech has been transforming financial markets and society at unprecedented speed and scale, and how a “laissez-faire” approach to Fintech regulation has contributed to that. The findings of the desk research lead to the second part of the thesis - an ethnographic study of European Fintech industry. This Fintech ethnography provides a counter-narrative to the opportunities and benefits-focused rhetoric that prevails among Fintech businessmen, scholars and policymakers responsible for Fintech regulation. By bringing the perspective of “the inside” to the debate on Fintech regulation, the thesis identifies new concerns and risks, and follows with a set of regulatory recommendations in its conclusions

Selling fashionable fabrics : the market for Lyonnais silks in 18th-century Italy

Defence date: 06 December 2022Examining Board: Prof. Stéphane Van Damme, (European University Institute); Prof. Giorgio Riello, (European University Institute); Prof. Natacha Coquery, (Université Lumière Lyon-II, external supervisor); Prof. Lesley Miller, (University of Glasgow)This thesis explores the trade in and consumption of Lyonnais silks in the Italian peninsula in the 18th century. Questioning the reasons and mechanisms behind the success of these fabrics, the thesis resituates this trade in the context of the European silk production. If the fabrics manufactured in Lyon were indeed successful in Italy, this thesis argues that their success was however precarious and limited to the niche of fashionable, patterned silks for clothing. Although the Italian weaving centres lost their leadership following the rise of the Lyonnais manufacture in the late 17th-century, they managed to adapt and remain strong contestants. Due to this competition, the Lyonnais manufacture had to rely more than ever on its strategy of fashion changes to keep an advantage over its rivals and the preference of consumers. Indeed, with the continuous renewal of patterns, their fabrics became the embodiment of taste and refinement, encouraging consumers eager to display such characteristics to sport them. The use of fashion, however, brought significant challenges to the Lyonnais merchant manufacturers. The quick rhythm of pattern changes put this trade under a constant time pressure. The Lyonnais merchants had to rely on a large and diverse network to ensure the quick circulation of their silks in the Italian peninsula. Furthermore, the preference of consumers was fragile, and Lyon had to constantly adapt to their changing demand. To keep this market, the Lyonnais merchants played on the price/quality ratio and incorporated different production techniques. This thesis argues that by doing so, the Lyonnais silk manufacture actively participated in the multiplication of goods made available to a wider range of consumers which characterised the evolution in production and consumption of 18th-century Europe

Porter un discours musulman en France : étude de cas : les 'musulmans vocaux' à l’épreuve des débats sur le mariage pour tous

Defence date: 9 September 2022Examining Board: Prof. Olivier Roy (EUI, Supervisor); Prof.Stephanie Hofmann (EUI, second internal); Prof. Eric Fassin (Univ. Paris 8); Prof.Nadia Marzouki (Sciences Po Paris)Cette recherche porte sur le positionnement public des musulmans de France sur le terrain des valeurs, dans un contexte où les études ont démontré une forme plus aiguë de conservatisme chez les musulmans français (comme dans d’autres catégories religieuses) que dans la moyenne nationale. En interrogeant un échantillon de personnalités que je qualifie de « musulmans vocaux », j’observe les difficultés pour ceux-ci à porter une parole publique « en tant que musulmans » auprès du public musulman français et de la sphère publique. Une difficulté qui concerne en particulier les débats publics autour des valeurs, dans un contexte où islam et Occident sont bien souvent construits de façon antagonique. Je démontre que le public musulman, lui-même clivé sur le terrain des valeurs, participe bel et bien aux clivages existants dans la sphère publique. Plutôt qu’une opposition entre islam de France et République française, on retrouve des clivages qui se superposent aux clivages nationaux. En menant une étude de cas ciblée sur les positionnements adoptés par ces personnalités durant les débats sur le Mariage pour tous, je démontre enfin que des considérations d’ordre stratégique, politique et citoyen ont conditionné les positionnements des uns et des autres, audelà même du spectre des valeurs

'The Storms of 1848' : the global revolutions in Spain

Defence date: 07 March 2022Examining Board: Lucy Riall (European University Institute); Pieter Judson (European University Institute); Florencia Peyrou Universidad Autónoma de Madrid); Stephen Jacobson, (Universitat Pompeu Fabra)This thesis explores the effect of the 1848 revolutionary cycle in Spain and its imperial space, focusing on its global connections and on the intersections between revolution, counterrevolution, and empire building. In doing so, it aims to contribute to a global approach to the 1848 revolutions that goes beyond perspectives that are exclusively centred on Europe as space. In this thesis, mid-nineteenth century Spain is understood not as a nation-state within the Iberian Peninsula, but as a fluid global empire with colonies, diasporas, and exile communities in various spaces. Considering the chronological frame of a “long 1848” and using various scales, this thesis stresses the continuities between the political upheavals and international reconfigurations that occurred around the year 1846, and the revolutionary events of 1848-1849. This thesis opposes the traditional image of Spain as an exception to the revolutionary cycle. It argues that the Parisian Revolution did in fact have a significant impact on the Iberian Peninsula, which prompted the Spanish government to develop counterrevolutionary measures on both sides of the Atlantic. Exile communities in Europe and spaces like Paris, Oran or New Orleans profited from the occasion presented by the 1848 revolutions to challenge either the political status quo in the metropole or the colonial order in the Caribbean. This generated a flow of transnational mobilities of revolutionary (and counterrevolutionary) actors, information, propaganda, and material; mobilities that diverse state actors tried to curtail through various means to prevent revolutionary contagion. At the same time, hundreds of political prisoners were sent to overseas possessions as part of a repressive repertoire that combined counterrevolution and colonisation through the relocation of convicts. Finally, this thesis explores the changes to several political cultures in the Spanish empire during the early 1850s as a result of the revolutionary cycle

Europe at the Expo : the pavilions of the European Community in universal expositions

Defence date: 15 July 2022Examining Board: Prof. Dr. Federico Romero (European University Institute); Prof. Dr. Corinna Unger (European University Institute); Prof. Dr. Alexander C.T. Geppert (New York University); Prof. Dr. Kiran Klaus Patel (Ludwig Maximilian University of Munich)In recent decades the cultural underpinnings of the European integration process have attracted more in-depth attention as scholars have unpacked the European Community’s efforts to stimulate the process of cultural Europeanisation. My research builds on the literature underlining the importance of political symbolism in the consolidation of the Community. I argue that international exhibitions, traditionally understood as diplomatic theatres for the display of symbolic nationhood, fulfilled a similar function for the European Community. This thesis is the first comprehensive study of an important platform for the discursive legitimation of the Community: namely, the European Community’s pavilions in Universal Expositions. More specifically, it examines Europe’s contributions to the Expos in Brussels in 1958, Montreal in 1967, Seville in 1992 and Shanghai in 2010. This thesis is based on research carried out in over a dozen archives in Europe and Canada, as well as oral history interviews with the European officials, architects and designers involved in developing the pavilions and curating the exhibitions. The chapters dealing with the four case studies analyse the preparations that preceded the Expos, and the products of these negotiations. I reveal that the exhibitions included narratives on the Community as both a modernising force in Europe and a protector and promoter of European culture. Furthermore, I illustrate how the Community pavilions argued for a stronger global position for Europe, whilst spreading an image of the Community’s positive influence throughout the world. I use a visual methodology which leans heavily on the analysis of sources such as photographs of the pavilions and exhibition displays, videos and brochures. By focusing on the discursive legitimation strategies in the Community’s Expo participation, this thesis sheds new light on the history of European cultural policy and public diplomacy.Chapter 1 ‘The ECSC Pavilion at Expo 58 in Brussels : Promoting coal, steel and a European soul' of the PhD thesis draws upon an earlier version published as chapter 'Exhibiting European integration at Expo 58 : the European Coal and Steel Community Pavilion' (2021) in the book ‘World fairs and the global moulding of national identities : international exhibitions as cultural platforms, 1851–1958’Chapter 2 ‘The European Community at Expo 67 in Montreal : a multifaceted diamond' of the PhD thesis draws upon an earlier version published as chapter ''A multifaceted diamond’ out of steel : exhibiting the European Communities at Expo 67' (2019) in the book ‘Image of a nation : country branding at World Expos