(with Simon Rother)
Review of Financial Studies, Volume 38, Issue 9, September 2025, Pages 2759–2809
[current version] [published version]
We present evidence that loan allocations and loan terms are closely linked to the strength of social connections between bank and borrower regions. Lending increases with social connectedness, particularly in the presence of strong screening incentives. If connectedness is high, banks discriminate more between borrowers, the terms of originated loans are more borrower friendly, and loan performance is improved. Furthermore, social connectedness is associated with higher bank profitability and with lending-related increases in borrower-region GDP growth and employment. Our results suggest that lending barriers decrease with social connectedness, which helps our understanding of geographic lending patterns and regional economic disparities.
(with Steven Ongena)
Journal of Financial and Quantitative Analysis, 2022, 57(7): 2627-2658.
[current version][published version]
This article demonstrates that low bank capital carries a negative externality because it amplifies local shock spillovers. We exploit a natural disaster that is transmitted to firms in non-disaster areas via their banks. Firms connected to a strongly disaster-exposed bank with lowest-quartile capitalization significantly reduce their total borrowing by 6.6% and tangible assets by 6.9% compared to similar firms connected to a well-capitalized bank. These findings translate to negative regional effects on GDP and unemployment. Additionally, following a disaster event, banks reduce their exposure to currently unaffected but generally disaster-prone areas.
(with Michael Koetter and Felix Noth)
Journal of Financial Intermediation, 2020, 43.
[published version] [working paper]We test if and how banks propagate disaster risk in the form of a natural catastrophe striking its customers: the 2013 Elbe flood in Germany. We identify shocked banks based on bank-firm relationships gathered for approximately a million firms and test for the existence of a corporate credit composition channel. Banks with relationships to flooded firms lend 38% more than banks without such customers after the flood. This lending hike is associated with higher profitability and reduced risk. Our results suggest that local banks are an effective mechanism to mitigate rare disaster shocks faced especially by small and medium-sized enterprises (SMEs).
(with Felix Noth)
Finance Research Letters , 2019, 28: 254-258.
[published version] [working paper]We investigate firm outcomes after a major natural disaster in Germany in 2013. We robustly find that firms located in the disaster regions have significantly higher turnover, lower leverage, and higher cash in the period after 2013. We provide some evidence that the effect comes mainly from firms that already experienced a similar major disaster in 2002. Overall, our results document that firm performance does not turn out bad necessarily in the direct aftermath of a natural disaster.
(with Santiago Carbo-Valverde)
Finance Research Letters , 2023, 54
[published version][Short WP Version (2022)] [Long WP version (2020)]
This paper investigates firm-bank relationship changes in the context of bank mergers. We find that firms are less likely to switch and more likely to drop their bank relationship after bank mergers. Importantly, in less competitive environments, measured by Lerner index and HHI, relationship drops are more likely. If mergers decrease competition, the existing consolidation wave in banking could thus induce increasingly harmful bank-firm relationship drops. Firms are also more likely to switch and less likely to drop their bank relationships if they are more creditworthy, measured by their z-score and available collateral.
(with Konrad Adler, Matthias Reiner and Jing Zeng)
[SSRN] [Data / Website]
This paper proposes a simple but effective tool to measure firms' exposure to climate risk: the market. We first develop a model showing that abnormal stock returns around significant climate policy events measure a firm's exposure to climate risk. On this basis, we create market-based firm greenness measures for around 36,000 international firms based on abnormal returns around UN climate conferences. The resulting measure creates intuitive rankings of sector-level climate-risk exposure and is correlated with, but distinct from existing measures. At the firm level, market-based greenness is associated with lower present and future carbon emissions. Green firms are more likely to file green patents, have lower stock-price volatility, and tend to be financially more robust. At the country level, market-based greenness is associated with lower emission intensity and a larger share of renewable energy.
(with Felix Dornseifer)
This paper shows that cross-country social networks can help to mitigate frictions in foreign direct investment (FDI). First, we document an economically important relationship between real-world social networks -- measured through friendship links on Facebook -- and FDI. We exploit common genetic ancestors as a novel instrument to establish a plausible causal link. Next, we show that social connectedness is more important if countries are legally and culturally different and if institutional frictions in the destination country are high. Social connections also mitigate investment frictions arising from physical climate risk and from countries transitioning to a less carbon-intensive economy. The effect of macroeconomic uncertainty on FDI is also significantly mitigated by social connections.
[draft available upon request]
Using a hand-collected data set on almost one million local television news stories in the U.S., this paper shows that depositors respond to changes in the intensity of reporting about the COVID-19 pandemic by holding more demand deposits. Counties, where pandemic news stories are 10 percentage points more frequent relative to all news stories hold 1.3% more demand deposits after the onset of the pandemic. This effect holds when controlling for the intensity of the pandemic and several other alternative explanations. Further evidence suggests that local news reflects the intensity of local discourse, which in turn causes a spike in deposits, especially in counties with a weaker social structure. The results suggest that the intensity of societal discourse around an event can have significant implications for banks and the real economy.
[older version] [current version under major revision]
I test whether non-quality related author reputation affects publication success. I exploit the fact that post-publication journal reputation changes affect an author's reputation exogenously. This quality independent reputation change significantly increases the publication success of the next publication, without influencing citations. The effect of reputation increases with journal prestige and is particularly pronounced in non-specialized economics journals. The results suggest that a better reputation can cause better publication outcomes.
When the Dam Almost Breaks: Disasters and Credit Risk
(with Sophia Ahrlt, Christian Gross and Iliriana Shala)
Not all friends are equal
Inequality, economic connectedness, and financial decision-making
(with Andra Ghent and Mark Jansen)