Abstract: We show that attention constraints on decision-makers create barriers to financial inclusion. Using administrative data on retail loan-screening processes, we find that attention-constrained loan officers exert less effort reviewing applicants from lower socioeconomic status (SES) backgrounds and reject them more frequently. More importantly, when externally imposed increases in loan officers’ workloads tighten attention constraints, loan officers are even more prone to quickly rejecting low-SES applicants but quickly accepting very high-SES applicants without careful review. Such selective attention allocation further widens the approval rate gap between high- and low-SES applicants — a unique prediction of the attention-based mechanism. 

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Abstract: Using China’s 2008 four-trillion-yuan economic stimulus as a setting and proprietary loan data, we study how a large publicly listed state-owned bank responds to the government’s countercyclical financing initiative while trying to meet the expectations of bank regulators and public investors. We find that the bank exhibited little changes in the process of setting internal credit ratings of borrowers, and internal ratings remain a valid, albeit weaker, predictor of interest rates in the stimulus period. Interest rates also remain a valid predictor of loan delinquency in the stimulus period. Evidence from analyzing unlisted borrowers is broadly similar. Overall, there is no systematic evidence that loan decisions of the state-owned bank are severely compromised in the stimulus period. The study adds to the limited understanding of how partially privatized state-owned banks balance different objectives in managing credit risk and is relevant to the longstanding debate over the roles of state-owned banks. 

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I am in the process of polishing my paper after having collected great feedback from the job market. The latest version will be coming very soon. Thank you!

Abstract: This paper provides novel evidence on how the pressure of climate-conscious shareholders can propagate emissions to asset owners who are subject to less oversight. Using shareholder proposals, engagement, and activism campaigns, I find firms respond to shareholders' climate scrutiny by divesting greenhouse gas emitting plants. More importantly, such transactions can lead to an increase in emissions at the sold plants if the acquirers are less scrutinized by the climate-conscious shareholders. The increase in emissions is driven by cutting down costly emission abatement activities and is concentrated in plants bought by private independent buyers, sold by firms that have environmental reporting in place, or located in areas with low environmental regulation risks. Overall, the evidence highlights that climate-conscious shareholder oversight plays an important role in the allocation of carbon-intensive assets and the internalization of environmental externalities. 

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Abstract: Exploiting NOx Budget Trading Program (NBP) implementation, we show that such a regional environmental regulation has unintended effects on the emission policies of manufacturing plants unregulated by the NBP via the pass-through of higher electricity prices. High energy-consuming manufacturers with tighter constraints or stronger incentives to maintain high earnings cut corners by reducing costly abatements to absorb the NBP-induced increase in energy input cost. The increased emissions worsen air quality within the 1-mile radius of manufacturing plants, which are mainly neighborhoods of underprivileged communities. While the NBP improves overall air quality, it also yields negative externalities along the supply chain. 

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