Working Papers

We study how the availability of credit shapes adaptation to a climatic shock, specifically, the long 1950s US drought. We find that bank lending, net immigration, and population growth decline sharply in drought exposed areas with limited initial access to bank finance. In contrast, agricultural investment and long-run productivity increase more in drought-exposed areas when they have access to bank finance, even allowing some of these areas to leapfrog otherwise similar areas in the subsequent decades. We also find unequal access to finance can drive migration from drought-hit finance-poor communities to finance-rich communities. These results suggest that broadening access to finance can enable communities to adapt to large adverse climatic shocks and reduce emigration.

2. Quantitative Easing, Bank Lending and Regulation (joint with Roberto Robatto and Andrea Orame)  Revise and Resubmit, Review of Financial Studies


We study the impact of the European Central Bank’s largest quantitative easing (QE) program on lending by Italian banks. We find that historical cost accounting (HCA) in capital regulation significantly mutes the impact of QE on bank lending and creates bank-level heterogeneity in the transmission of QE. This heterogeneity in turn allows some banks to increase lending at the expense of their competitors, reducing the impact of QE on overall bank lending. These results suggest that while HCA can insulate banks’ balance sheets during periods of distress, it also limits the effectiveness of central bank policies aimed at increasing lending.

3. Financial Integration through Production Networks (joint with Indraneel Chakraborty, Saketh Chityala, and Apoorva Javadekar)

This paper studies how interconnected plants distribute additional liquidity from banks through the supply chain. Using a spatially segmented bank branch expansion rule in India, we find that direct exposure to additional bank credit allows plants to hold less precautionary cash and increase bank debt. Directly exposed plants pass through liquidity to customer plants as short-term trade credit. This liquidity spillover improves sales, employment, and productivity at customer plants. Structural estimation yields an average credit multiplier of 1.48. Our results underscore the credit multiplier effects of production networks and the importance of financial integration among firms with limited banking services.



4. Sales Force Incentives and Consumer Credit (joint with Vincent Yao)

This paper studies the impact of sales force incentives on the terms of automotive credit and consumer default. We find that loan rates decline and sales volume increase sharply on the last day of the calendar month, when end-of-month sales tournaments conclude and sales force bonus rankings are decided. One day later, interest rates rise sharply and consumers that obtain higher cost automotive credit during this period are more likely to default. These results suggest that sales force incentives can induce material fluctuations in short-term credit supply that affect consumer welfare. 

5. The FOMC and the Mortgage Market (joint with Marco Giacoletti and Edison Yu)


Monetary policy works through financial markets to affect real consumer decisions. Buying a home is one of the most important consumer decisions, and we study the impact of the FOMC cycle on the timing and cost of mortgage applications. We find that the FOMC cycle is a focal point of attention for some consumers, driving an increase in the demand for mortgage credit ahead of these meetings. This bunching is more concentrated among the financially literate and when monetary policy uncertainty is high. It also leads to an increase in the cost of mortgage credit ahead of FOMC meetings.