Working Papers

This paper examines how policy uncertainty influences mutual funds' ESG allocation decisions. Using U.S. mutual fund holdings from 2008 to 2022 and the Economic Policy Uncertainty index, I find institutional investors systematically increase holdings of high-ESG stocks during elevated policy uncertainty, consistent with using ESG characteristics as hedging instruments. Building on Merton's ICAPM framework, I show these adjustments reflect deliberate portfolio rebalancing rather than passive price movements. Mutual funds without environmental mandates exhibit stronger hedging responses than green funds. 

Results remain robust across alternative uncertainty measures and strengthen during the COVID-19 period, suggesting ESG characteristics provide state-dependent financial benefits.

This paper examines how the balance of legal protections for creditors and shareholders shapes corporate borrowing across emerging markets. Using 124,561 firm-year observations from 16,049 firms across 27 countries over 2010–2020, and indices constructed from the World Bank's Doing Business data, I identify four institutional configurations: inclusive convergence, dual weakness, creditor-biased divergence, and shareholder-biased divergence. Inclusive convergence — where both creditor and shareholder rights are strongly protected — is associated with book leverage 7.8% and market leverage 23.3% above sample means. Creditor-biased divergence correlates with reduced borrowing, whilst shareholder-biased divergence exhibits modest positive associations. Effects are most pronounced for financially constrained, technology-intensive, and financially distressed firms.