Bank ownership and financial stability

This paper investigates a politician's choice for state or private control of banks, anticipating how this choice influences actions by citizens seeking exclusive access to finance. We show that when political accountability is low, politicians prefer control over lending and funneling via state banks. As state banks are less efficient, high levels of accountability induce private bank ownership. This transition occurs at intermediate levels of accountability when politicians allow private banks to be captured by a small group of entrepreneurs. These entrepreneurs lend to themselves on preferential terms, inducing a greater chance of bank failure. In an attempt to increase entrepreneurs' losses at default and hence reduce funneling as accountability increases, the politician leaves an increasing share of rents to entrepreneurs. As a result the likelihood of default decreases, but remains positive.Interestingly, the model implies that entry and financial stability are likely to be lowest for intermediate levels of political accountability. We provide suggestive empirical support on bank control and review existing evidence on entry and financial stability

Entry: direct control or regulation?

We model a setting in which citizens form coalitions to seek preferential entry to a given market. The lower entry the higher firm profits and political contributions, but the lower social welfare. Politicians choose to either control entry directly and be illegally bribed, or regulate entry using a general rule and be legally lobbied. We show how direct control generates lower entry rates and grants politicians more bargaining power, as no interest group has a strategic advantage in the lobbying game. Using a rule namely creates a cutt-off creating a free riding advantage for citizens with characteristics favoured by the rule. By forming a separate interest group these 'strongest' citizens are able to reduce competition from other groups, which is impossible with direct political control. Despite generating lower rents, the illegality of bribes induces politicians to switch to regulation when political accountability is high. Countries with weak accountability are characterised by bribing and relatively low entry while countries with strong accountability exhibit lobbying and higher entry rates

Microbial degradation of 1,3-dichlorobenzene.

A gram-negative, peritrichously flagellated rod, tentatively identified as an Alcaligenes sp., was isolated from a mixture of soil and water samples by using 1,3-dichlorobenzene as the sole carbon and energy source. During growth on 1,3-dichlorobenzene, almost stoichiometric amounts of chloride were released. Simultaneous adaptation studies, as well as enzyme studies, indicated that 1,3-dichlorobenzene was metabolized via 3,5-dichloro-cis-1,2-dihydroxycyclohexa-3,5-diene to 3,5-dichlorocatechol. Subsequently, the latter product was cleaved, yielding 2,4-dichloromuconate. No initial hydrolytic step yielding 3-chlorophenol was detected in this species