Working Papers:

Micro-evidence from a system-wide financial meltdown: The German Crisis of 1931
(with Markus Brunnermeier and Stephan Luck)

Abstract: This paper studies a major financial panic, the run on the German banking system in 1931, to distinguish between banking theories that view depositors as demanders of liquidity and those that view them as providers of discipline. Our empirical approach exploits the fact that the German Crisis of 1931 was system-wide with cross-sectional variation in both deposit flows and bank distress and took place in absence of a deposit insurance scheme. We find that interbank deposit flows predict subsequent bank distress early on. In contrast, wholesale depositors are more likely to withdraw from distressed banks at later stages of the run and only after the interbank market has started to collapse. Retail deposits are—despite the absence of deposit insurance—largely stable and are only withdrawn at the height of the crisis when all deposit flows have become generally uninformative in line with withdrawal decisions being panic-driven and independent of a specific bank's fundamentals. Our findings emphasize the heterogeneity in depositor roles, with discipline being best provided through the interbank market.

Status: Working Paper, available here 
Presentations: NBER Summer Institute DAE Egg-Timer (2019, Boston), Federal Reserve Bank of New York (2019, NYC), 

The Myth of the Lead Arranger's Share
(with Quirin Fleckenstein, Sebastian Hillenbrand, and Anthony Saunders)

Abstract: We make use of SNC data to examine syndicated loans in which the lead arranger retains no stake. We find that the lead arranger sells its entire loan share for 27 percent of term loans and 48 percent of Term B loans, typically shortly after syndication. In contrast to existing asymmetric information theories on the role of the lead share, we find that loans, which are sold, are less likely to become non-performing in the future. This result is robust to several different measures of loan performance and reflected in subsequent secondary market prices. We explore syndicated loan underwriting risk as an alternative theory that may help explain this result.

Status: Working paper, available here

Local Banks, Credit Supply, and House Prices

Abstract: I study the effects of an increase in the supply of local credit on local house prices and employment by exploiting a natural experiment from Switzerland. Losses in U.S. security holdings triggered a migration of dissatisfied retail customers from a large, universal bank (“UBS”) to homogenous local mortgage lenders in mid-2008. Mortgage lenders close to UBS branches experience larger inflows of deposits, unrelated to their investment opportunities. Using the geographic distance between UBS branches and mortgage lenders as an instrument for deposit growth, I find that banks with an exogenous positive funding shock invest in strict accordance with their specialization (i.e. local mortgage lending). Consequently, house prices in neighborhoods around affected banks rise over 50% more than around unaffected banks. I also find an increase in the number of employees at small firms, reliant on real estate collateral, in these neighborhoods. My results show that local mortgage oriented banks affect house prices through the supply of credit and that bank specialization thereby plays an important role in the allocation of capital across sectors.

Status: Working Paper, available here  - Revision Requested at Journal of Financial Economics
Presentations: Federal Reserve Board (2018, Washington D.C.), Federal Reserve Bank of New York (2018, New York), LSE (2018, London), Aarhus University (2018, Aarhus), Frankfurt Goethe (2018, Frankfurt), IESE Barcelona (2018, Barcelona), Bundesbank (2018, Frankfurt), Swiss FINMA (2018, Bern), Swiss National Bank (2018, Zurich),  AFA poster (2018, Philadelphia),
Swiss Winter Conference on Financial Intermediation (2018, Lenzerheide), Muenster Banking Workshop (2017, Muenster), NYU Stern (2017, NYC), University of St Gallen (2017, St. Gallen).
Other: Best Paper Award Muenster Banking Workshop

Financial Frictions, Real Estate Collateral, and Small Firm Activity in Europe 
(with Ryan Banerjee)

AbstractWe observe significant heterogeneity in the correlation between changes in house prices and the growth of small firms across certain countries in Europe. We find that, overall, the correlation is far greater in Southern Europe than in Northern Europe. Using a simple model, we show that this heterogeneity may relate to financial frictions in a country. We confirm the model’s propositions in a number of empirical analyses for the following countries in Northern and Southern Europe: the United Kingdom, Norway, France, Italy, Spain, and Portugal. Small firms in countries with higher financial frictions (for example, places where bankruptcy resolution is more difficult and/or takes longer) see a greater dependence on “stable” real estate collateral. This is most pronounced for opaque (for example, very young) firms. Through an extension to our model and our choice of specification, we show that our findings are most consistent with a collateral-value-based credit supply channel and rule out a consumer-driven demand effect.

Status: Available as Federal Reserve Bank of New York Staff Report here
Early version available as BIS Working Paper (peer reviewed): BIS . Ealy title: Housing Collateral and Small Firm Activity in Europe 
Presentations: Honorary PhD Ceremony Special Conference (
2018, St. Gallen), Royal Economic Society (2017, Bristol), IBEFA/Western Economic Association (2016, Portland), European Investment Bank (2016, Luxembourg), IIM Workshop (2016, Calcutta), BIS Workshop (2015, Basel)


Borrowing Constraints, Home Ownership and Housing Choice: Evidence from Intra-Family Wealth Transfers

(with Martin Brown)

Abstract: We study the impact of borrowing constraints on home ownership and housing demand by comparing the tenure choice and housing quality of consumers who receive intra-family wealth transfers to those that do not. Our analysis is based on household-level panel data providing information on the receipt of wealth transfers, changes in tenure status as well as changes in the size and quality of housing. On average we find that the receipt of a wealth transfer increases the propensity of consumers to transition from renters to home-owners by 6-8 percentage points (35% of the sample mean). Additional analyses suggest that this effect is unlikely to be driven by wealth effects and thus can be attributed to the relaxation of borrowing constraints. By contrast, wealth transfers do not increase the likelihood that existing homeowners “trade-up” to larger homes in better locations. 

Status: Journal of Money, Credit, and Banking (JMCB forthcoming)
Earlier versions of the Working Paper are available on SSRN
Conference presentations
IBEFA/Western Economic Association (
2017, San Diego), Swiss Winter Conference on Financial Intermediation (2017, Lenzerheide), DGF (2016, Bonn), EEA-ESEM (2016, Geneva), Young Swiss Economists Meeting (2016, Zurich), Congress of the Swiss Society of Economics and Statistics (2016, Lugano), Banking Credit and Macro-Prudential Policy (2015, Ireland CBI), Netspar Conference (2015, Modena)
Other: Mentioned in Sunday edition of NZZ, 09 April 2017

Work in Progress:

Immigration and the Displacement of Incumbent Households 
(with Zeno Adams)

Abstract: We study the effects of immigration on the location choice of incumbent households in Switzerland. Immigration affects households through three distinct channels: a house price, a wage, and a sentiment/expectations channel. We make use of detailed immigration data that includes the universe of immigrants to arrive in Switzerland between 1992 and 2013, house price data for all Swiss communities, migratory patterns of Swiss inhabitants, on aggregate, as well as household-level panel data on 7000 Swiss households over 15 years. We find evidence of self-selection by some residents out of neighborhoods with high immigration, despite no overall house price or wage pressure. Our research provides valuable insights for policy makers and academics alike into some of the effects of large scale immigration. 

: Early-Stage Working Paper; available upon request
Conference presentations: AEA/ AREUA (2019, Atlanta), European Real Estate Society (
2016, Regensburg), RBFC (2016, Amsterdam), 14th International Paris Finance Meeting (2016, Paris)

Pandemics Change Cities: Municipal Spending and Voter Extremism in Germany, 1918-1933

Abstract: We merge several historical data sets from Germany to show that influenza mortality in 1918-1920 is correlated with societal changes, as measured by municipal spending and city-level extremist voting, in the subsequent decade. First, influenza deaths are associated with lower per capita spending, especially on services consumed by the young. Second, influenza deaths are correlated with the share of votes received by extremist parties in 1932 and 1933. Our election results are robust to controlling for city spending, demographics, war-related population changes, city-level wages, and regional unemployment, and to instrumenting influenza mortality. We conjecture that our findings may be the consequence of long-term societal changes brought about by a pandemic. 

Note: The results in this paper are still early stage and represent a correlation. I make no statements regarding causation, as many channels can be at play. 

Status: Very early stage working paper, available here