The Finance Brown Bag Seminar is held by the Institute for Finance, Banking and Insurance (WU Vienna) and the Vienna Graduate School of Finance (VGSF). It serves as a presentation platform for PhD students, faculty members, and visitors. An overview of BBS on the website of the Institute for Finance, Banking and Insurance.
June 19th, 2019, 12:00-13:30, D4.0.144
Mrinal Mishra, Universität Zürich
Title: "The effect of conflict on lending: Empirical evidence from Indian border areas"
We study the effect of conflict on loan officers in areas bordering India and Pakistan in the state of Jammu & Kashmir in India. We observe that the loan terms borrowers obtain in equilibrium get progressively worse after repeated incidences of conflict. This may be attributed to changes in beliefs or changes in risk aversion on behalf of the branch administration. Our tests demonstrate that both factors, changing risk preferences and beliefs contribute to the final outcome. The latter primarily manifests itself through changes in expected future default due to learning about the environment. Our results are expected to inform policymakers how lending may evolve when faced with shocks emanating from political and economic turmoil.