Analyses of Policies and Innovation in Banking

This thesis explores the impacts of policy changes and technological advancements on the banking and financial sectors. The research comprises three chapters, each addressing a unique aspect of financial policy or innovation. The first chapter examines the European Central Bank's (ECB) collateral and haircut policy, specifically the implications of making certain bonds eligible for use in the ECB's lending facility. It finds that the change in collateral requirements significantly affects bond prices in secondary markets, contributing to discussions on eligibility premiums and the effects of haircut adjustments. The second chapter extends this analysis by studying the policy’s influence on bond trading behaviour, revealing that kinks within the existing haircut requirements lead to increased trading of eligible bonds, thus highlighting potential unintended consequences of the policy on market activity. The final chapter shifts focus to the role of mobile internet in easing credit constraints for businesses in developing regions. Using survey data, this chapter underscores how access to mobile internet can improve credit access in regions with limited banking infrastructure, offering valuable insights for policymakers looking to enhance financial inclusion in underserved areas.