Essays in financial economics

This thesis consists of three essays. The first essay develops a tractable, dynamic equilibrium model, to understand how the zero lower bound constraint on deposit rates (ZLB) affects (optimal) banking regulation and risk-taking incentives. The model shows that the ZLB can make capital requirements less effective, and delivers a novel rationale for cyclically adjusting regulation. The second- and third- chapters center around the question how recent technological advances affect firm financial policies and the wider macro-economy as a whole. Advances in ICT technology since the 1980s have had a major effect on the kind of products firms produce, and the inputs they use. In the past, production largely required tangible inputs such as factories and machinery, whereas digital technologies, R&D, organizational structure, high-skill human capital and other intangible assets dominate the production process of modern firms. The second chapter studies this topic at the micro level, and explores implications for financial-, payout- and compensation-policies, using firm-level data. The third chapter focuses on macroeconomic consequences, and develops a growth model that relates technological change to recent long-term trends, including falling interest rates and a shift of finance away from corporations, towards mortgage finance.