Why do Sovereign Borrowers Post Collateral? Evidence from the 19th Century

This paper explores the reasons why sovereign borrowers post collateral. Such behavior is paradoxical because conventional interpretations of collateral stress repossession of the assets pledged as the key to securing lenders against information asymmetries and moral hazard. However, repossession is generally difficult in the case of sovereign debt and in some cases impossible. Nevertheless, such sovereign “hypothecations” have a long history and are again becoming very popular today in developing countries. To explain sovereign collateralization, we emphasize an informational channel. Posting collateral produces information on opaque borrowers by displaying borrowers’ behavior and resources. We support this interpretation by examining the hypothecation “mania” of 1849-1875, when sovereigns borrowing in the London Stock Exchange pledged all kinds of intangible revenues. Yet, at that time, sovereign immunity fully protected both sovereigns and their assets and possessions. Still, we show that hypothecations significantly decreased the cost of sovereign debt. To explain how, we stress the pledges’ role in documenting sovereigns’ wealth and the management of revenue streams. Based on an exhaustive library of bond prospectuses collected from primary sources, matched with a panel of sovereign bond yields and an innovative measure of sovereign fiscal transparency, we show that collateral minutely described in debt covenants served to document and monitor sovereign resources and development prospects. Encasing this information in contracts written by lawyers served to certify the quality of the resulting data disclosure process, explaining investors’ readiness to pay a premium.

Leptin sensitizing effect of 1,3-butanediol and its potential mechanism

Leptin is an adipocyte-derived hormone that regulates appetite and energy expenditure via the hypothalamus. Since the majority of obese subjects are leptin resistant, leptin sensitizers, rather than leptin itself, are expected to be anti-obesity drugs. Endoplasmic reticulum (ER) stress in the hypothalamus plays a key role in the pathogenesis of leptin resistance. ATP-deficient cells are vulnerable to ER stress and ATP treatment protects cells against ER stress. Thus, we investigated the therapeutic effects of oral 1,3-butanediol (BD) administration, which increases plasma β-hydroxybutyrate and hypothalamic ATP concentrations, in diet induced obese (DIO) mice with leptin resistance. BD treatment effectively decreased food intake and body weight in DIO mice. In contrast, BD treatment had no effect in leptin deficient ob/ob mice. Co-administration experiment demonstrated that BD treatment sensitizes leptin action in both DIO and ob/ob mice. We also demonstrated that BD treatment attenuates ER stress and leptin resistance at the hypothalamus level. This is the first report to confirm the leptin sensitizing effect of BD treatment in leptin resistant DIO mice. The present study provides collateral evidence suggesting that the effect of BD treatment is mediated by the elevation of hypothalamic ATP concentration. Ketone bodies and hypothalamic ATP are the potential target for the treatment of obesity and its complications.

Interpreting Hume on the Causal Principle

Chapter 4 supports by means of collateral evidence the claim that Hume woke Kant by attacking the principle of sufficient reason. First, it considers Treatise 1.3.3, though without supposing that Kant knew this text, in order to show that there, where Kemp Smith and others thought Hume was attacking the principle that every event has a cause, he was actually attacking the principle of sufficient reason. Second, it explains Hume’s lack of explicitness in the Enquiry about the fact that he was attacking the principle of sufficient reason; he avoided explicitness on this score, I argue, in order to veil his antitheological intentions. Third, it examines Sulzer’s commentary on Enquiry Section 4, which Kant surely knew well, to show that Sulzer read Section 4 as attacking the principle of sufficient reason. The fact that Kant’s contemporaries such as Sulzer and Tetens read Hume in this way makes it plausible to suppose that Kant did too.

Information asymmetries and agricultural credit

Purpose The purpose of this paper is to analyze the functioning of the rural credit market of Lima from 1825 to 1865, paying special attention to the effect of information asymmetries on the access to rural credit. Design/methodology/approach The article relies on primary sources for the study of the early credit market of Lima. In particular, the study relies on a sample of notarized loans for 1825–1865 and on property tax reports, collected from the National Archives of Peru, to determine the effect of information asymmetries, collateral and regional lending on access to credit. The article also analyzes the legal system of Peru during this period to determine whether property rights were well protected and so collateral could be used in the rural credit market. Findings A revision of the legislation shows that the legal system had some deficiencies, but allowed landlords and tenants to use their assets as collateral. Tax reports show that landlords and tenants owned valuable capital that could be used as collateral. Evidence from notarized loans shows that information asymmetries severely restricted inter-regional lending. In Lima, however, notaries played a role as financial intermediaries, providing the information about potential borrowers and allowing landlords and tenants to access credit. As a result, access to credit was significant for landlords and tenants. Originality/value This paper is one of the few historical studies on the role of information asymmetries in the allocation of rural credit in Latin America. It contributes to our understanding of credit markets prior to the creation of banks.

Refugees and Their Displaced Documents of Identity

This chapter begins by posing the question, how did the Indian state classify refugees as poor, displaced, and lower caste and how did it create the material infrastructure of identifying welfare beneficiaries? The Partition, which brought in its wake a sea of displaced populations that deluged both countries, threw up conundrums of identification that straddled the philosophical and the feasible, the material and the intangible. Given that there were no pre-existing genres of recognizing the refugee figure so alien to the memory of the colonial state, civic and rehabilitation authorities had no choice but to accept and privilege alternative or ‘collateral evidence’ that emerged from the makeshift documents and narrated itineraries of refugees and refugee associations. While focusing its inquiries on a smaller universe of those disparagingly termed ‘refugee squatters’ in post-Partition Delhi and their housing claims, the present chapter seeks to show how refugee knowledge and popular practices of self-recognition were salient to the fashioning of identification documents.