Lili Dai

Academic Experience


Working Paper

Abstract: This study examines how exposures to Environmental Protection Agency (EPA) enforcement actions against a borrower increase lenders’ incentives to monitor other borrowers’ polluting activities, resulting in pollution reduction by their other borrowers. Findings reveal that, following the enforcement actions, firms borrowing from exposed lenders significantly reduce their toxic releases relative to firms borrowing from unaffected lenders. Additional findings reveal that the spillover effects are more pronounced when lenders’ environmental monitoring incentives are greater and when they exert greater influence over borrowers. We also find that lenders are more likely to terminate lending relationships with borrowers that do not sufficiently reduce polluting activities, which suggests that termination is a credible threat to nonresponsive borrowers. Taken together, our study’s findings suggest that the EPA can achieve its environmental goals–reaching a broader set of firms while limiting the scope of environmental enforcement actions–by leveraging the private lending markets.

Presented at the Australian National University, Monash University, Shanghai Jiao Tong University, Southwestern University of Finance and Economics, University of Calgary, University of Mississippi, University of North Carolina at Chapel Hill, University of New South Wales, University of Texas at Dallas and the 2024 ASU Cactus Conference. 


Abstract: We examine the role of borrowers’ digital footprints in debt collection. Using a sample of personal loans from a Chinese fintech lender, we find that information acquired by the lender through borrowers’ digital footprints increases the repayment likelihood on delinquent loans. The effect can be explained by two channels: bonding borrowers’ obligations with their social networks and locating borrowers’ physical locations. Moreover, the lender tends to approve loan applications from borrowers with digital footprints, even though these borrowers occasionally have a higher likelihood of delinquency. These findings suggest that digital footprints, as a new type of enforcement mechanism, can enhance financial inclusion.

Presented at Fudan University, Guangdong University of Finance and Economics, Huazhong Normal University, Jiangxi University of Finance and Economics, La Trobe University, Lanzhou University, Macquarie University, Nanjing Agriculture University, Renmin University of China, Shandong University of Finance and Economics, Shanghai Jiao Tong University, Sichuan University, Soochow University, Tianjin University, Wuhan University, Xi’an Jiao Tong University, Zhejiang University, Zhongnan University of Economics and Law, the 2020 Summer Research Workshop of China Journal of Accounting Research, and the 2020 Academic Forum of Young and Middle-aged Committee of Guangdong Economic Society, the 2020 NBER Chinese Economy Working Group Meeting, the 2021 Accounting and Finance Association of Australia and New Zealand Conference, the 2021 11th Financial Markets and Corporate Governance Conference,  the 2021 4th Annual Short-Term Funding Markets Conference, the 2021 3rd Future of Financial Information Conference, the 2021 Conference on Financial Innovation, the 2021 China International Conference in Finance (CICF), and the 2021 China Financial Research Conference.


Publication


Professional Service


Education


Contact