Vahid Saadi, Ph.D.
Assistant Professor of Finance
IE Business School

Maria de Molina 12,
4º Izda
28006, Madrid
P: +34917821706

Research interests: Empirical Banking, Financial Intermediation, Real Estate, Microeconometrics

Working Papers
  • Mortgage Supply and the US Housing Boom: The Role of the Community Reinvestment ActSAFE Working Paper No. 155 -- Revise and Resubmit at The Review of Financial Studies

    • Presented at: AFA 2017
    • This paper studies the role of the Community Reinvestment Act (CRA) in the US housing boom-bust cycle. I find that the enhancement in enforcing the CRA in 1998 increased the growth rate of mortgage lending by CRA-regulated banks to CRA-eligible census tracts. I use this shift in mortgage supply in an instrumental variable framework and find that every 1 percentage point higher annual growth rate of mortgage supply leads to 0.3 percentage points higher annual growth rate of housing prices. I show that CRA-induced mortgages went to borrowers with slightly lower FICO scores but encountered considerably more frequent delinquencies.            

  • Public Bank Guarantees and Allocative Efficiencyncy, with Reint Gropp and Andre Guettler, IWH Discussion Paper No 7/2015 

    • Presented at: EFA 2015*; EBC (Tilburg) 2015; ASSA Day-ahead 2016*; MFA 2016; FIRS 2016*; BoE, BHC, CEPR and CFM Workshop on Finance, Investment and Productivity 2016; Chicago Financial Institutions Conference 2017*; 25th Finance Forum (UPF)MIT Golub Center for Finance and Policy 4th Annual Conference* (* presented by co-authors)

    • We use a natural experiment and matched bank/firm data to identify the effects of bank guarantees on allocative efficiency. We find that with guarantees in place unproductive firms invest more and maintain higher rates of sales growth. Moreover, firms produce less productively. Firms also survive longer in banks’ portfolios and those that enter guaranteed banks’ portfolios are less productive. Finally, we observe fewer economy-wide firm exits and bankruptcy filings in the presence of guarantees. Overall, the results are consistent with the idea that guaranteed banks keep unproductive firms in business for too long and prevent their exit from the market.

  • The Cleansing Effect of Banking Crises, with Reint Gropp and Joerg Rocholl, (Draft available upon request)

    • Presented at: Arne Ryde Conference on Financial Intermediation (Lund, 2017)*; Joint BIS-IMF-OECD conference co-sponsored by the Global Forum on Productivity on WEAK PRODUCTIVITY: THE ROLE OF FINANCIAL FACTORS AND POLICIES (Paris, 2018) (* presented by co-authors)

    • Scheduled at: The Real Effects of Financial Crises: Past, Present, Future (Frankfurt, 2018); Chicago Financial Institutions Conference (2018); 1st Biennial Bank of Italy and Bocconi University conference on "Financial stability and Regulation" (Rome, 2018)

    • In this paper, we test the cleansing effects of the U.S. banking crisis of 2007-2009. We show that in regions with higher levels of restructuring in the banking industry during the crisis, there is also more restructuring in the real sector: more establishments, firms, and jobs are lost if more banks are failed. By contrast, in regions with higher regulatory forbearance exerted on distressed banks during the crisis, there is less restructuring in the real sector. Consistent with the cleansing hypothesis, regions with more bank failures or less regulatory forbearance during the crisis experience a better productivity growth path after the crisis. We rely on an instrumental variable approach to address the endogeneity of regulatory forbearance to expectations of output growth.

Work in Progress
  • Electoral Lending Cycles: The Case of German Savings Banks, with Reint Gropp
  • The Pope, Martin Luther and Banking Behavior: Does Local Denomination Affect Bank Risk Taking?, with Konstantin Kiesel