Essays on informal banking
Massachusetts Institute of Technology. Dept. of Economics.
Abhijit Banerjee and Xavier Gabaix.
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This thesis is a collection of three theoretical essays that examine the role of time-inconsistent preferences in informal banking. The first two chapters focus on specific banking institutions, while the third studies individual welfare more generally. In Chapter 1, I develop a model of rotating savings and credit associations (roscas) where members are quasi-hyperbolic discounters. I show that, in this setting, roscas function as commitment savings devices, and can survive in equilibrium even in the absence of formal contracting or informal social sanctions. In Chapter 2, I study the behavior of quasi-hyperbolic discounters who have access to credit and a non-secure savings technology. I show that these agents might simultaneously save and borrow to create optimal investment incentives for future selves. Chapter 3 evaluates and compares the welfare outcomes for time-inconsistent agents under several banking environments.
Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2006."September 2006."Includes bibliographical references.
DepartmentMassachusetts Institute of Technology. Dept. of Economics.
Massachusetts Institute of Technology