Economist - Banque de France

Research Interests: Corporate Finance, Political Economy, Banking and Financial Intermediation




Contact Information

Address
Banque de France
31, rue Croix des petits Champs
75001 PARIS
FRANCE

Email
@banque-France.fr








 
 
       




    
    Working Papers
 
     Political Uncertainty and Corporate Investment: the Real Effects of Checks and Balances
This article investigates the causal effects of political gridlock on investment and employment outcomes using a regression discontinuity design. I use US gubernatorial elections from 1978 to 2010 as a source of exogenous variation in the ability of the governing party to implement its political agenda, depending on whether the party controls both the executive and the legislative branch (unified government) or not (divided government). This article empirically verifies that Checks and Balances have real effects. I find that both public and private firms respond to the political cycle by holding off on investing and hiring when government switches from divided to unified. Investment drops by an average of 3 to 7 percent in the year after the election giving a party full control of the government. The effects of transitions to divided government vary over time, from positive in the early years to significantly negative in times of higher political polarization. The findings support the hypothesis that moving from divided to unified government raises policy uncertainty by ending status quo and increasing the probability of (more polarized) future policy changes. Consistent with a real option channel, the negative effect is stronger for capital intensive firms with lower asset redeployability.

Presentations: Maryland Political Economy working group, Banque de France Aghion seminar, 2018 AFSE , 2018 26th Finance Forum (Santander)
 
     Unconventional Monetary Policy and Bank Lending Relationships (with W.Mullins and C.Cahn)
How to support private lending to firms in recessions is a major open question. This paper examines how banks adjust their firm lending portfolios in a downturn by exploiting an unexpected unconventional monetary policy that reduced the cost of funding bank loans to a subset of firms in France in 2012. This cost reduction in the midst of a credit crunch raises eligible firms’ bank debt, and reduces both defaults on their suppliers and downgrades of their credit ratings, providing causal evidence that targeted unconventional monetary policy can be an effective lever to increase private credit and reduce contagion of financial distress. The effect is almost entirely driven by firms with only a single-bank relationship—a numerous and understudied group—and the positive loan supply shock we examine is transmitted to firms through banking relationships. We find that, for firms with strong hard information only, banking relationships support additional lending during a credit crunch. We also provide suggestive evidence that single-bank firms were substantially more credit constrained than multi-bank firms.

Latest version available at SSRN: https://ssrn.com/abstract=2970199
Working paper version available at : https://www.banque-france.fr/sites/default/files/medias/documents/wp659_0.pdf

2017 Colorado Winter Finance Summit Best Paper Award
Presentations:
R.H.Smith Maryland Finance Brownbag, 2017 WEAI Santiago, IFABS 2017 (Oxford), 25th Finance Forum (Universitat Pompeu Fabra), BdF-BdI Workshop on Corporate Finance, Banque de France seminar, FDIC 17th Bank Research Conference, ECB non-standard Monetary Policy Workshop, JFI-Olin Conference, Séminaire Fourgeaud (French Ministry of Finance), USC Finance seminar, 2017 Colorado Winter Finance Summit, MFA 2018, 11th Swiss Winter conference on Financial Intermediation, FIRS 2018, SFS Cavalcade 2018, WFA 2018, 2018 Wharton Conference on Liquidity and Financial Fragility

    Non Academic Publications
Credit Default Swaps and Financial Stability: Risks and Regulatory Issues
Financial Stability Review 13, The future of financial regulation, pp.75-78, September 2009. (with M.Gex and N.Gauthier)
Assessment and Outlook for Sovereign Wealth Funds
Focus Banque de France 1, November 2008.
Les Crédits aux Sociétés Non Financières en France: Evolutions Récentes
Bulletin de la Banque de France 174, pp.31-41, August 2008. (with J.Demuynck and P.Rousseaux)

Evolutions Récentes du Crédit aux Ménages en France

Bulletin de la Banque de France 169, pp.61-67, January 2008. (with J.Demuynck and T.Yon)