Private credit, public investment and natural disasters: creating and destroying private capital at local level

Mari, Rebecca Maria (2023) Private credit, public investment and natural disasters: creating and destroying private capital at local level. PhD thesis, London School of Economics and Political Science.

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Abstract

This thesis explores two main drivers of creation of private capital at local level: private credit, and public investment, using natural disasters as exogenous shocks to private wealth and public policy intervention. It does so by adopting a quasi-experimental approach with case studies set in Italy and the United Kingdom between 2007 and 2019. Theoretical models and literature drawn from economic geography, public economics and finance frame the discussion and the identification designs over the three chapters. The originality of this thesis lays in the novel combination of the research questions addressed, the empirical identification designs and the highly granular datasets from which evidence is obtained. Three main questions are explored using natural disasters, private credit, and public investment alternatively as shocks and conditioning assumptions in the study of private capital development at local level. What is the role of local private capital endowment on the private sector’s responsiveness to public investment? How do credit market imperfections affect the firm’s response to investment subsidies and the selection of the policy’s optimal target group? What is the impact of a negative shock to the entrepreneur’s home on their small-medium business? This thesis provides three main novel insights. The first one is the crucial role of private capital stock endowment at local and firm-level in determining the effectiveness of different types of public investment in mobilising private investment and labour demand. The second one is the significant impact of natural disasters on local economies not just through physical destruction and factor relocation, but also through indirect effects generated by credit market imperfections and wealth effects. The third one is the effectiveness of public policy in fostering private capital development at local level, which is shown to be related to the degree of complementarity between the public investment and the pre-existing private capital stock.

Item Type:	Thesis (PhD)
Additional Information:	© 2023 Rebecca Maria Mari
Library of Congress subject classification:	G Geography. Anthropology. Recreation > G Geography (General) H Social Sciences > HC Economic History and Conditions
Sets:	Departments > Geography and Environment
Supervisor:	Crescenzi, Riccardo and Monastiriotis, Vassilis
URI:	http://etheses.lse.ac.uk/id/eprint/4592

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