Shashwat Agrawal

We examine whether the policy of designating banks as systemically important affects loan performance in an emerging-market setting where systemically important banks are large domestic institutions and market imperfections make monitoring crucial for loan performance. Using loan-level data and the staggered designation of banks as Domestic Systemically Important Banks (DSIBs) in India, we find that loan performance deteriorates following DSIB designation. The evidence points to bank-level moral hazard as the underlying mechanism. DSIBs reduce post-origination monitoring and weaken loan recovery efforts. Borrowers respond to these changes, leading to poorer financial health and loan repayment, particularly on loans extended by DSIBs.

I exploit an unexpected rescue of a private sector bank to examine spillover effects on other banks. The unprecedented protection of shareholder claims in the failed bank increases bailout expectations among other private sector banks, triggering two opposing channels of systemic risk. Affected banks engage in individual risk-shifting by lending more to risky borrowers, increasing credit risk, and expanding overall lending. Yet, they also increase loan specialization due to weaker incentives to correlate assets with peers. On net, their contribution to systemic risk rises by about 23%, highlighting how bailouts can reshape risk-taking and amplify fragility across the banking system.

We analyze how private firms' patent scope affects IPO success. Patent scope may affect IPO variables through a ``performance channel'' (greater patent scope enabling better post-IPO performance), and an ``information channel'' (greater patent scope conveying insider private information to outsiders). Controlling for patent quantity and quality, firms with greater patent scope have larger IPO amounts, younger IPO age, greater IPO initial returns, more high-reputation underwriters, and more institutional investors. They develop more new products, conduct more exploratory innovation, but suffer greater litigation hazard. Overall, firms with greater patent scope obtain greater equity valuations post-IPO. We establish causality through IV analyses.