Main Publications

Journal of Financial and Quantitative Analysis (2019) [WP] [BibTeX] [Slides]

Changes in banking regulation have unintended and undocumented effects on the market for corporate credit. Bank branching deregulation following the Riegle-Neal Interstate Branching and Banking Efficiency Act of 1994 decreased syndicated loan issuance but spurred bilateral lending to corporations. This shift is also reflected in interest rate spreads, pointing to a supply-driven substitution effect. Results suggest that changes to banking regulation can affect not just the amount but also type of credit in the economy.

Industrial and Corporate Change (2019) [WP] [BibTeX] [Data] [Slides]

There is no evidence that concentration has any type of positive effect on long-run profitability differences - testing linear relations, interactions with critical concentration levels and with mobility barriers. Introducing business segments data in this analysis, a new IV and a novel natural experiment I obtain results that point into the opposite direction, towards statistically and economically significant negative causal effects.

Journal of Corporate Finance (2017) [WP] [BibTeX] [Data]

Using Compustat to measure industry concentration is problematic. Popular Herfindahl Index approximations have vanishingly low correlations with the more comprehensive Census metric. As a result, major variables of interest in corporate finance correlate markedly different with these indicators. I show that this can lead to a breakdown of regression results.

Work in Progress

Working Paper (2019) [BibTeX] [Data] [Slides][Older Version 1] [Older Version 2]

Differences in loan management policies constitute a channel through which lending relationships affect borrowers. I establish this by exploiting shifts of control rights to creditors after covenant violations in a regression discontinuity design. To identify causal effects of relationships I use either interacted borrower*lender, or borrower*quarter + lender*quarter fixed effects. Differences in loan renegotiations and informal lender policy are reflected in investment and firm exit likelihoods.

  • How Lending Decisions Affect Consumer Behavior, with Valentin Burg (Humboldt University)

To understand how loan offers affect consumer behavior we analyze website visitors of an online furniture shop that offers short-term loans. We exploit cut-off rules that shifted over time for regression discontinuity designs. Lending decisions offers induce interested “window shoppers” to finalize purchases. Borrowers with lower financial health respond more to consumer loan offers.

  • The End of Bank Branching

I describe an unprecedented secular decline in the number of bank branches, experienced by all states in the U.S. and by most other developed economies. This effect is more pronounced in areas and banks with more branches. Institutes with higher losses on their loan portfolio and smaller branches are more affected. Searching for drivers behind this process , I find significant causal effects of exogeneous negative shocks to bank health.

Using a new database on asset types pledged as collateral in debt contracts we explore variations in foreclosure rules in the U.S. across states. These affect only commercial mortgages or loans secured by real estate, generating within-borrower variation. Creditor-friendly foreclosure laws are associated with lower interest rates and longer maturities for loans secured on real estate, but also with a lower likelihood of borrowers pledging collateral in the first place.