Essays in Finance and Development Economics

In this thesis, I study topics in development economics and finance, focusing on the effects of policies in the digital payments' market and regulation of immigration. The thesis comprises three distinct papers that explore financial behavior, technological adoption, and economic policy impacts in developing contexts. The first paper examines the impact of substituting bank deposits with digital currency on banks' lending behavior in developing countries. Using an unexpected tax on Mobile Money in Uganda as a natural experiment, the study finds that the tax led to decreased mobile money usage and increased bank deposits and ATM withdrawals. This influx of new deposits allowed banks to increase their lending. However, the nature of new liquidity resulted in shorter loan repayment terms and a shift of credit from high-risk to low-risk borrowers. Consequently, low-risk borrowers received larger loans at lower interest rates. The second paper investigates the trade-off between competition and financial inclusion due to vertical integration of mobile network and money operators in Africa. By analyzing data on mobile money fees, network coverage, and financial performance, the study finds that platform interoperability policies lowered fees and reduced fee disparities across operators. However, this benefit was offset by a reduction in mobile towers and network coverage, particularly in rural and poor areas, leading to decreased financial inclusion. The study suggests that combining interoperability with rural telecommunications subsidies can reduce fees without compromising coverage. The third paper explores the effects of restrictive immigration policies on technology adoption in migrant-sending countries. Analyzing the dramatic drop in Italian emigration to the United States following the 1921 Emergency Quota Act, the study uses a difference-in-differences approach to show that reduced emigration hindered technology adoption and capital investment. This is consistent with the theory that increased labor supply decreases firms' incentives to adopt labor-saving technologies. Data indicates that districts more exposed to migration restrictions saw significant increases in population and manufacturing employment due to the ``missing migrants'' who could not emigrate. These essays provide insights into the complex dynamics of financial behavior, technology adoption, and policy impacts in developing economies, highlighting the trade-offs and interconnected outcomes that policymakers must consider to foster inclusive and sustainable economic development.