S. LAKSHMI NAARAAYANAN

Using data on the universe of mortgages on offer in the United Kingdom, we examine the prevalence and characteristics of green mortgages, used to finance energy-efficient properties. We estimate substantial heterogeneity in their financial benefits: products offering upfront cashback have annual equivalent gains of £49, whereas preferential-rate products offer interest discounts of 9 basis points, equivalent to £180 per year. Exploiting institutional features, we show that cashback-based green mortgages are used for customer acquisition and targeted at borrowing constrained home buyers. We do not find evidence in support of the hypothesis that green mortgage benefits reflect lower financing risk.

We study manufacturing firms' production responses to an emission capping regulation. Firms lower emissions by improving energy efficiency, substituting towards cleaner fuels, and moving from producing electricity to purchasing it from the grid. They move away from coal-intensive products and increase their abatement expenditures. These changes improve firm productivity, supporting theories that regulation prompts technology adoption. In the aggregate, we document lower product variety and an altered firm-size distribution, driven by a reduced likelihood of business formation. Our findings highlight the mechanisms behind how mandated pollution reduction can be effective and the costs it imposes, suggesting a loss of agglomeration externalities.

This paper studies whether ESG funds trade off the long-term sustainability of portfolio firms for greater short-term financial performance. ESG funds reveal their preference for superior returns by voting against E&S proposals when it is uncertain whether these proposals will pass. We find that consistent with their financial incentives, active ESG funds and non-ESG-focused institutions are more likely to oppose E&S proposals. However, investors do not appear to respond to such differential voting patterns by withdrawing capital. Overall, our results highlight that investors' conflicting objectives of advancing sustainability while achieving superior returns can impede improvements in corporate sustainability.

We use administrative data covering the universe of mortgage originations to individual real estate investors in the United Kingdom to study financing outcomes following a large, unanticipated increase in interest rates. Post-shock, originations become more concentrated among specialist lenders, who exhibit lower interest rate pass-through for larger borrowers. To offset these smaller rate increases, they charge higher loan fees, thereby attenuating the impact of higher rates on interest-coverage ratios and facilitating credit. High-frequency evidence from loans on offer show similar responses, indicating that specialist lenders adjust product design to target specific borrower types and, in doing so, reinforce market segmentation.

This paper investigates the informational role of lobbyists in the context of foreign lobbying in the United States. Using Department of Justice data on contacts between foreign governments and US legislators, we show that exogenous shocks to these connections influence foreign aid, tariff legislation, and corporate subsidies to foreign firms. Subsidies to connected foreign firms are associated with lower local employment, challenging the view that lobbyists provide technical expertise for better policymaking. However, subsidies to connected firms increase incumbent legislators' vote shares suggesting that foreign lobbying may still deliver valuable political information. Overall, our findings highlight the nature of the information channel of lobbying and underscore the broad economic significance of foreign lobbying in the US.

We examine how congressional representation affects local housing markets through its influence on housing finance. Using the near-universe of U.S. housing transactions from 1990 to 2020 linked to congressional districts, we exploit the staggered entry and exit of representatives from the House Financial Services Committee (FSC) as plausibly exogenous shocks to their influence over housing and mortgage policy. A border design comparing properties within five kilometers of adjacent districts holds local economic conditions constant. House prices increase by about 4 percent when a district's representative joins the FSC and decline by a similar amount when the representative leaves. These effects coincide with higher mortgage origination, greater government-sponsored enterprise (GSE) purchases, and higher conforming loan limits, but no change in construction activity or allocations of Low-Income Housing Tax Credit programs. Representation on the FSC affects local housing markets primarily through credit supply, leading to localized changes in property values.

This paper examines how religion influences equity investment and portfolio diversification. We exploit trading sessions held during a major religious festival in India that emphasizes new beginnings and long-term prosperity to examine how religiously framed cues affect individual investor behavior. Individuals whose religion is associated with the festival invest substantially more during these sessions and buy new stocks. Consistent with the emphasis on long-term prosperity, purchases are concentrated in stocks of large, mature, and low-volatility firms, and do not exhibit lottery-like characteristics. These investments are held longer than other portfolio positions and result in persistent increases in portfolio size and diversification. In addition, these purchases represent a larger financial commitment for lower-income individuals and smaller accounts, who subsequently benefit from increased equity exposure. Our findings highlight that religion can nudge individuals towards long-term investments and have implications for wealth accumulation.

This paper examines whether equal inheritance rights can narrow the gender gap in entrepreneurship. I exploit a staggered reform in India that extended such rights to women from specific religious groups at different times across states. The reform did not expand the overall stock of collateral but redistributed it toward women, relaxing financial constraints and enabling financial inclusion. Female business formation increased without reducing entrant quality or crowding out men, raising aggregate entrepreneurship. Consistent with a financing channel, effects are larger in industries with greater external finance dependence and in regions with deeper bank penetration. At the same time, discriminatory social norms muted these gains, with weaker responses in areas where women face stronger barriers to market participation. Overall, the findings show that property rights reforms can foster entrepreneurship by redistributing collateral, even when restrictive norms persist.

We study the causal effect of new roads on small business creation, using a population threshold-based road-building program in rural India. Findings reveal a doubling of new microenterprises in these villages after the program, compared to a 7.5% increase in their belowthreshold counterparts. Three channels contribute to this growth: First, paved roads expand access to nearby town markets. Second, all-weather paved roads free villages from disruptions in accessing external input/output markets during the monsoon season, which especially matters for new business creation in flood-prone areas. Third, the increase in new businesses is largely driven by ten times as many new businesses started by women in villages with new roads as before, leading to a substantial reduction in the pre-existing gender gap. Two mechanisms, in turn, contribute to this reduction: an erosion of patriarchal social norms resulting from men migrating to towns for work; and a reduction in the time women have to spend on childcare, due to connectivity-induced improvements in local schools. Finally, such women-led businesses tend to hire other women in conservative rural India, leading to a sizeable increase in job opportunities for them.

We study the introduction of gender quotas in India, the first country with strong patriarchal views to mandate female directors on corporate boards. Despite small penalties, we find high compliance rates, resulting in a threefold expansion of the female director labor pool. After the reform, almost half of the firms appoint and retain female directors beyond the ambit of the quota, a change that is significantly weaker on boards with stronger patriarchal views. The better opportunities for females manifest in a higher likelihood of appointment on important subcommittees and in a reduction in the gender gap in director remuneration from 30% to 3%. Our results suggest that although gender quotas deepen and diversify the director pool, strong patriarchal views among incumbent directors hinder the transition to gender-diverse boards.

Using firm-linked transaction data we document that firms with a higher percentage of online sales (online presence) have lower sensitivity to aggregate shocks. For the average firm in our sample, a one standard deviation increase in online presence reduces the sensitivity of their sales to aggregate shocks by 19%. This effect is stronger for smaller firms but it is statistically and economically significant for all quartiles of the size distribution. Interestingly, the lower sensitivity is concentrated among firms with online share above the median, suggesting a non-linear relationship. We further document that this effect remains present in the aftermath of the COVID-period, although its economic magnitude is slightly smaller. We use data on regional variation in internet connectivity to construct an instrument for firm online presence. Using this instrument we find that the relationship is only statistically significant for firms with below-median sales. Finally, for the sub-sample of traded firms, we show that this lower cash-flow sensitivity is also reflected in lower return volatility. A one standard deviation increase in online share is associated with a 9.6% (18.5 basis points) decrease in daily stock return volatility. Consistent with our IV regressions this effect doubles to 15.6% (31 basis points), when we consider firms with below-median sales only.