with Sudheer Chava and Rohan Ganduri Journal of Financial and Quantitative Analysis, forthcoming.

Covenant-violating firms maintain their investment subsequent to the introduction of CDS trading. Moreover, after CDS introduction, covenant-violating firms are less likely to default. Thus, in the private debt markets, CDS discipline borrowers, while the empty creditor problem due to CDS is mitigated.

Financial statement complexity is positively associated with firms' reliance on bank financing. This result is consistent with banks' superior information processing capabilities.

with Itay Goldstein and Andrew MacKinlay Journal of Financial Economics, April 2020.

The U.S. Federal Reserve conducted quantitative easing (QE) in response to the financial crisis. We find that banks benefiting from MBS purchases increase mortgage origination. At the same time, these banks reduce commercial lending and firms that borrow from these banks decrease investment. The effect of Treasury purchases is different: either positive or insignificant in most cases.

with Itay Goldstein and Andrew MacKinlay Review of Financial Studies, July 2018.

Analyzing the period 1988–2006, we document that banks that are active in strong housing markets increase mortgage lending and decrease commercial lending. Firms that borrow from these banks have significantly lower investment. Commercial loans were crowded out by banks responding to profitable opportunities in mortgage lending.

Venture capitalists take actions hidden from their investors, i.e. limited partners (LPs), that delay revealing negative information about VC fund performance until after a new fund is raised. After fundraising is complete, write-offs double and reinvestments in relatively worse off entrepreneurial firms increase.

Taxation at different points of the income distribution has heterogeneous impacts on households’ incentives to work, invest, and consume. We find that reducing income inequality between low and median income households improves economic growth. However, reducing income inequality through taxation between median and high-income households reduces economic growth.

with Rong Hai, Hans Holter and Serhiy Stepanchuk Journal of Monetary Economics, Jan 2017.

    • Carnegie-Rochester-NYU Conference on Public Policy, April 2016.

We quantify the real effects of supply-side frictions due to the financial disintegration of European countries since the 2008 financial crisis. We develop a multi-country general equilibrium model with heterogeneous countries and destination specific financial frictions. Financial disintegration leads to a 0.54% fall in output in Europe since the crisis.

Americans work more than Europeans. We document that women are typically the largest contributors to the cross-country differences in work hours. In a calibrated life-cycle model with heterogeneous agents, marriage and divorce we find that the divorce and tax mechanisms together can explain 45% of the variation in labor supply between the United States and the European countries.

We propose a new role for private investments in public equity (PIPEs) as a mechanism to reduce coordination frictions among existing equity holders. We establish a causal link between the coordination ability of incumbent shareholders and PIPE issuance. Improved equity coordination following a private placement leads to favorable debt renegotiations within one year of issuance. Mitigating coordination frictions among shareholders ultimately decreases the odds of firm default in half.