We study the impact of regulations expanding bank branching in India. We find that public sector banks (PSBs) reduce their lending to poorly performing firms when branching expands in a district. Non-performing loans at PSBs also increase when branching expands. Also, inefficient firms that...

Decomposing mutual funds' tracking error into its idiosyncratic and systematic components is informative about funds' intention to implement picking and timing strategies. Accordingly, we define the fraction of a fund's active return variance that is idiosyncratic as the fund's degree of picking...

We propose a theory of self-selection by mutual fund managers into picking and timing strategies. With adverse selection, investors learn more easily about the skill of picking funds than of timing funds, since picking investments are less correlated than timing investments. The equilibrium...

We study qualitative information disclosure by mutual funds when investors learn from these disclosures in addition to past performance. We show theoretically that fund managers with specialized strategies optimally choose to disclose detailed strategy descriptions, while managers with...

We provide causal evidence on the linkage between dollar liquidity and dollar invoicing exploiting an unanticipated shock to the dollar financing around the Taper Tantrum. Using the differential funding shock across countries, we test the impact of dollar liquidity on invoicing and imports by...

The paper builds on a simple yet novel idea that the way investors react to the recent mutual fund performance depends largely upon the long-term historical performance of that fund. In particular, I find that investors react more actively to the fund's recent performance in case of the funds...

We examine how global institutional funds respond to news-based economic policy uncertainty (EPU) in the investment destination and home country. We document a number of novel findings. First, on an average there exists a negative flow-EPU relationship for global funds. Second, we document a...

Economic activity is risky. Returns across economic sectors can be highly variable, potentially causing costly adjustments to consumption. However, when returns are imperfectly correlated across sectors and insurance is unavailable, diversification can reduce the economic impact of shocks....

Does the choice of exchange rate regime affect the way an economy''s adjustment to real shocks? Exploiting the randomness of natural shocks, this paper assesses empirically the often contrasting answers found in the theoretical literature. The evidence supports key themes in this literature, and...

Does policy conditionality worsen domestic welfare, as governments are forced to attempt unpopular reforms resulting in damaging protests, or does conditionality help implement reforms that otherwise would have been impossible? This paper analyzes these questions. Using a game-theoretic...