Abstract This article provides evidence from a fragile state that citizens demand more of a voice in the government when it tries to tax them. I examine a field experiment randomizing property tax collection across 356 neighborhoods of a large Congolese city. The tax campaign was the first time most citizens had been registered by the state or asked to pay formal taxes. It raised property tax compliance from 0.1% in control to 11.6% in treatment. It also increased political participation by about 5 percentage points (31%): citizens in taxed neighborhoods were more likely to attend town hall meetings hosted by the government or submit evaluations of its performance. To participate in these ways, the average citizen incurred costs equal to their daily household income, and treated citizens spent 43% more than control. Treated citizens also positively updated about the provincial government, perceiving more revenue, less leakage, and a greater responsibility to provide public goods. The results suggest that broadening the tax base has a “participation dividend,” a key idea in historical accounts of the emergence of inclusive governance in early modern Europe and a common justification for donor support of tax programs in weak states.

The tax benefit of interest deductibility encourages debt financing, but regulatory constraints create dependency between bank leverage and asset risk. Using a large international sample of banks this paper shows that banks located in high-tax countries have higher leverage and lower average asset risk-weights. This trade-off is stronger when regulation is more stringent and for banks with less capital. Non-financial firms' leverage and asset risk are positively related to tax rates, as further evidence of the regulatorily induced adjustment of portfolio risk. A difference-in-difference analysis provides support for a causal interpretation of these results. Overall, higher tax rates are positively correlated with systemic risk, suggesting that the lower asset risk does not offset the risk-inducing effect of tax rates on bank leverage.

When starting their campaigns, activist investors face the decision of when to begin communication with the management of the target firm. We document how the choice to start communication early with management, before the 13D disclosure, fits within the campaign's overall strategy. Nearly a quarter of the activist campaigns in our sample begin with what we call open activism. More credible activists with lower costs of activism are more likely to engage with management early and this early engagement is related to their desire to see specific changes made at the target firm. Eventual actions taken by activists, such as a subsequent merger or proxy contest, as well as the long-run performance of the target, are also related to this initial communication decision. Together, our findings suggest that open activism is an important part of the activist's underlying strategy and that market participants understand this link.

Using country-level data, we study the relation between institutionalization of capital and various measures of reliance on public equity markets. For developed and developing countries, assets under institutional management (mutual funds, pension funds, and insurance companies) are negatively related to the number of listed companies, market capitalization, and trading volume. The negative relationships are estimated on the margin, as other factors such as GDP have countervailing positive partial effects and are generally stronger for more highly developed countries. Results indicate that as direct ownership of equity by retail investors is displaced by investing through institutions, financial systems become less public-market-centric.

This study investigates whether deposit insurance affects bank payout policy. To overcome identification concerns, we use the US Emergency Economic Stabilization Act of 2008, which increased the maximum limit of deposit insurance coverage, leading to significant changes in the proportion of insured deposits to assets of some banks, while leaving others relatively unaffected. In line with the view that dividends convey information regarding financial health, we find that banks, which experience a substantial increase in insured deposits reduce dividends relative to others with a smaller increase in insured deposits. An extensive battery of further tests confirm that our results are not driven by events (such as capital injections due to participation in the Trouble Asset Relief Program, peer effects, state tax changes, deposit insurance pricing changes) that took place around the time of the increase in the maximum limit of deposit insurance coverage. Overall, the results of our empirical analysis suggest that banks holding fewer uninsured deposits pay less dividends.

We show that the vast majority of young married men in Saudi Arabia privately support women working outside the home (WWOH) and substantially underestimate support by other similar men. Correcting these beliefs increases men’s (costly) willingness to help their wives search for jobs. Months later, wives of men whose beliefs were corrected are more likely to have applied and interviewed for a job outside the home. In a recruitment experiment with a local company, randomly informing women about actual support for WWOH leads them to switch from an at-home temporary enumerator job to a higher-paying, outside-the-home version of the job. (JEL D83, J16, J22, O15, Z13)

We build a model of the U.S. economy with multiple aggregate shocks (income, housing finance conditions, and beliefs about future housing demand) that generate fluctuations in equilibrium house prices. Through a series of counterfactual experiments, we study the housing boom and bust around the Great Recession and obtain three main results. First, we find that the main driver of movements in house prices and rents was a shift in beliefs. Shifts in credit conditions do not move house prices but are important for the dynamics of home ownership, leverage, and foreclosures. The role of housing rental markets and long-term mortgages in alleviating credit constraints is central to these findings. Second, our model suggests that the boom-bust in house prices explains half of the corresponding swings in non-durable expenditures and that the transmission mechanism is a wealth effect through household balance sheets. Third, we find that a large-scale debt forgiveness program would have done little to temper the collapse of house prices and expenditures, but would have dramatically reduced foreclosures and induced a small, but persistent, increase in consumption during the recovery.

We develop metrics to assess the complexity of a bank holding company (BHC), based on its ownership structure. Large BHCs have intricate ownership hierarchies involving hundreds or even thousands of legal entities that may contribute to increased operational risk and greater opacity. Our measures are mathematically grounded, intuitive, and easy to implement. They may be particularly useful in the context of resolution, where regulators often face significant time pressure and coordination challenges. We use regulatory filing data from the Federal Reserve to validate the measures, demonstrating that they provide a useful complement to balance sheet information in assessing BHC complexity. Notably, the proposed measures are highly correlated with existing complexity indicators that are not based on organizational structure and are less correlated with size than these existing complexity measures. We show that the proposed measures provide additional explanatory power for the regulatory indicators, even after controlling for size.

Standardized information disclosures aim to help people compare complex financial products and make better choices. We investigate the extent to which information shown in a regulator-mandated dashboard helps retirement savers choose between alternative pension plans. We conduct incentivized experiments that collect participants’ repeated choices between two pension plans using the mandatory dashboard, and subsequently test whether an even simpler dashboard improves choices, and by how much. Participants switch quickly from a high- to a low-fee pension plan when they see explicit nominal fees but are significantly more confused by percentage fees and adjust slower. When differences between plan performance arise from gross returns, not fees, we find that complex information formats can seriously hinder participants’ recognition and reactions. We present a Bayesian updating model which estimates the relative noisiness of the signals from fees and gross returns across different treatments and use this model to show how better information presentation raises retirement savings.

Women’s reluctance to negotiate is often used to explain the gender wage gap, popularizing the push for women to “lean in” and negotiate more. Examining an environment in which women achieve positive profits when they choose to negotiate, we find that increased negotiations are not helpful. Women know when to ask: they enter negotiations resulting in positive profits and avoid negotiations resulting in negative profits. While the findings are similar for men, we find no evidence that men are more adept than women at knowing when to ask. Thus, our results caution against a greater push for women to negotiate.