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Essays on Agricultural and Financial Markets in Pakistan

Chaudhry, Muhammad Imran
http://rave.ohiolink.edu/etdc/view?acc_num=osu1470400809

Abstract Details

2016, Doctor of Philosophy, Ohio State University, Agricultural, Environmental and Developmental Economics.
In the spirit of applied economics, my dissertation comprises three interdisciplinary and policy-oriented Chapters, broadly related to the fields of development economics, agricultural economics and financial accounting. Methodologically, I have utilized a wide array of methods including economic modeling, time-series econometrics, mathematical analysis and numerical simulations. In the first Chapter, I extend the burgeoning literature examining the adverse effects of the industrial organization of the microfinance sector and competition for donor money on poverty alleviation to highlight problems with the existing structure of the microcredit markets. My model explains the stylized facts associated with the recent crisis in the microfinance sector of less developed countries. I formulate a dynamic optimization problem to capture the objective functions of credit unconstrained and credit constrained lenders. The default rates in a symmetric Nash equilibrium are compared with default rates from the analogous social planner problem to prove that intra-firm competition results in inefficiently high default rates. Subsequently, I show that increasing flows of donor funds lead to even higher default rates regardless of lender types. Lastly, I analyze the location choices of lenders to show that competition among lenders leads to an over emphasis on urban areas at the cost of the exclusion of rural areas, resulting in financial exclusion of rural poor and sub-optimally high default rates in urban areas. In the second Chapter, I study the underlying mechanisms behind price fluctuations in the Pakistan poultry sector. Based on extensive fieldwork, I document the organization of production and the price discovery process in the poultry sector in Pakistan. Second, I develop a parsimonious, dynamic model to simultaneously capture the optimizing behavior of chick and poultry farmers. I explicitly model the mutual interdependencies between upstream famers and downstream farmers arising from vertically linkages in agricultural values chains, an aspect of agricultural production overlooked in the theoretical literature on cobweb models. Third, empirically testable hypothesis about farmers’ expectation regime are derived from the underlying model as a system of linear time-delay difference equations. Estimations resulted based on a unique, hand-collected dataset comprising weekly farm-gate prices of chicks and broilers in Pakistan reveal that the behavior of poultry prices is broadly consistent with a naive expectation regime. Fourth, mathematical and numerical analysis are used to demonstrate that the underlying model reproduces the stylized patterns observed in the actual poultry prices. In the third Chapter, I examine the relationship between firm-specific accounting information and stock prices in the Karachi Stock Exchange (KSE). Estimation results clearly show that accounting information is an important determinant of stock prices and merit a reconsideration of the hypothesis that KSE is a `phantom’ stock market. Time-series regressions reveal a gradual decline in the value relevance of accounting information that cannot be fully explained by the earning lack of timeliness hypothesis or changes in earnings quality. Empirical estimates from the Hwang & Salmon (2004) state space model lend support to the hypothesis “noise trading” driven by herding behavior led to the decline in the value relevance of accounting information in the KSE.
Mario Miranda (Advisor)
Abdoul Sam (Committee Member)
Ani Katchova (Committee Member)
Joyce Chen (Committee Member)
373 p.
Accounting; Agricultural Economics; Economic Theory; Finance
Microfinance Crisis; Strategic Default; Nash Equilibrium; Competition Externality; Endogenous Price Fluctuations; Chaotic Cobweb Markets; Time Delay System; Value Relevance of Accounting Information; Herding Behavior; Determinants of Herding Behavior

Recommended Citations

Citations

  • Chaudhry, M. I. (2016). Essays on Agricultural and Financial Markets in Pakistan [Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1470400809

    APA Style (7th edition)

  • Chaudhry, Muhammad. Essays on Agricultural and Financial Markets in Pakistan. 2016. Ohio State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1470400809.

    MLA Style (8th edition)

  • Chaudhry, Muhammad. "Essays on Agricultural and Financial Markets in Pakistan." Doctoral dissertation, Ohio State University, 2016. http://rave.ohiolink.edu/etdc/view?acc_num=osu1470400809

    Chicago Manual of Style (17th edition)

osu1470400809
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This open access ETD is published by The Ohio State University and OhioLINK.