Jacelly Cespedes

Assistant Professor of Finance

University of Minnesota

Carlson School of Management

Contact Information

321 19th Avenue South, 3-135

Minneapolis, MN 55455

cespe013@umn.edu

Research Interests

Corporate Finance, Household Finance, Financial Intermediation, FinTech

Working Papers

The Effect of Principal Reduction on Household Distress: Evidence from Mortgage Cramdown (with Carlos Parra and Clemens Sialm) (Revise & Resubmit RFS)

    • Selected Presentations: Virtual Real Estate Seminar, CEPR Workshop on Household Finance, New York Fed/NYU Stern Conference on Financial Intermediation, FIRS

Featured in​ Columbia Law School’s Blue Sky Blog

Funded by NBER-HF Small Grants Program

Mortgage cramdown enabled bankruptcy judges to discharge the underwater portion of a mortgage during Chapter 13 bankruptcy before the Supreme Court disallowed this practice in 1993. We exploit the random assignment of cases to judges to quantify the ex-post effects of Chapter 13 bankruptcy over the period from 1989 to 1993. We find that a successful Chapter 13 filing in a cramdown court substantially decreases the five-year foreclosure rate, the propensity to move, and the crime rate. Our results suggest that principal write-down considerably reduces homeowner's distress.

More Money, More Options? The Effect of Cash Windfalls on Entrepreneurial Activities in Small Businesses (with Xing Huang and Carlos Parra) (Revise & Resubmit RFS)

    • Selected Presentations: NBER SI Entrepreneurship, Northeastern Finance Conference, NYU Conference on Household Finance, FIRS, Showcasing Women in Finance

Using a novel setting in which retailers receive bonuses when selling jackpot winning lottery tickets, we show that large windfalls not only increase the revenue and employment of existing businesses but also spur serial entrepreneurship. Serial ventures occur mainly in nonretail industries. We document a pecking order in entrepreneurs' responses: small windfalls increase revenue, whereas windfalls larger than $100,000 trigger business creation and employment growth. Consistent with wealth effects as an indispensable mechanism, the effects become larger still when cash windfalls far surpass the amount required to start new businesses. Finally, cash windfalls do not lead to financial distress.

Strategically Staying Small: Regulatory Avoidance and the CRA (with Jordan Nickerson and Carlos Parra)

Featured in​ Columbia Law School’s Blue Sky Blog

The 1995 CRA reform led to a two-tiered evaluation scheme determined by a bank's asset value. Using this feature, we examine the consequences of regulatory avoidance in the context of the CRA. Banks exploit the attribute-based regulation by strategically slowing asset growth, bunching below the $250M threshold. Exploiting the introduction of the asset threshold, we find that regulatory avoidance also has real effects. Banks near the threshold prior to the 1995 reform experience an increase in the rejection rate of LMI loans, while areas they serve experience a decline in the county-level share of small establishments and independent innovation. Taken together, these results highlight a bank’s willingness to take costly actions to avoid increased regulatory oversight, and as a consequence, reduced credit access for individuals the CRA is designed to benefit.

Heterogeneous Sensitivities to Interest Rate Changes: Evidence from Consumer Loans

WFA-CFAR Award in Honor of Professor Stuart I. Greenbaum

    • Selected Presentations: EFA, FIRS, Colorado Finance Summit (Ph.D. Session), Corporate Finance Conference at Washington University in St. Louis (Ph.D. Poster Session)

I analyze the credit contract decisions made by borrowers and whether borrower choices can be used for screening. In the setting, the interest rate jumps at specific loan amount thresholds, which create incentives for bunching below the cutoffs. I find substantial heterogeneity in sensitivities to interest rate jumps. Evidence supports borrower sophistication as the main explanation for this heterogeneity. Furthermore, borrowers who fail to bunch below the thresholds are 18% more likely to default and 24% less likely to receive funding from institutional lenders. Findings suggest that borrowers’ suboptimal credit decisions can be used to reduce information asymmetries.

Almost Famous: The Short- and Long-Term Effects of Housing Wealth Shocks on Career Decisions (with Zack Liu and Carlos Parra)

  • Selected Presentations: Finance in the Cloud I, European Meeting of the Labor and Finance Group, UTD Finance Conference, CEPR Household Finance Seminar Series

Using a novel data set of career histories in the film industry, we study the effect of housing wealth shocks on the quality of jobs that individuals pursue. Homeowners facing greater declines in local house prices reduce their participation in high-quality projects, such as big-budget films and productions with award-winning talent, while increasing their involvement in low-quality films. Importantly, renters are not affected by these shocks. Consistent with individuals using home equity during job searches, these negative shocks have a greater impact on homeowners with lower equity and on those who extracted home equity before the Great Recession. Moreover, house price declines from the housing crisis also affect long-term career outcomes.

Peer Effects Across Firms: Evidence from Security Analysts (with Carlos Parra)

    • Selected Presentations: Annual Meeting of the Society of Labor Economics

We assess the magnitude and mechanisms of workers’ productivity spillovers by estimating the peer effects among those working in the same occupation across firms using the setting of security analysts. The empirical design exploits one feature of social networks: the existence of partially overlapping peer groups. This refers to analysts who cover similar industries, but not exactly the same group of industries, which generates peers of peers (excluded peers). This allows the identification of both the peers' characteristics and the peers' outcome effects. In addition, to deal with common group shocks, the exogenous characteristics of excluded peers are used as instruments. We find strong evidence of spillovers in terms of peer outcomes and characteristics. In particular, peer accuracy is positively related to analysts’ accuracy, while the number of industries followed by analysts' peers negatively impacts accuracy. In terms of the potential mechanisms that account for the spillover effects, we find that the effects are stronger when analysts see their peers performing well, and that besides imitation knowledge spillovers also help explain the results.


Working in Progress

The ex-ante effects of bankruptcy provisions on small firms (with Richard T. Thakor and Keer Yang)

Small Business Boundaries

  • Funded by NBER-HF Small Grants Program