The effects of two-way lending between financial conglomerates in bilateral repo markets (with Jorge Flórez, Banco de la República y Carlos Cañon, Bank of England)Journal of Empirical Finance (2025): R&RWe examine how market structure, market power, and systemic risk respond to close and intense lending relationships between financial conglomerates (FCs) in non-centrally cleared bilateral repo markets. Using transaction-level data from Mexico, we document persistent and stable funding relationships between FC-affiliated banks and funds, characterized by two distinctive features: First, the funding transactions are two-way, meaning that a pair of rival FCs provide lending to each other on the same day. Second, two-way transactions are executed at lower average rates than one-way transactions. We show that two-way lending (TWL) between FCs contributes to increased market concentration and market power for FC-affiliated funds, while worsening the lending terms for independent banks and funds. Furthermore, we find that the bank-level contribution to systemic risk rises with increased TWL.Consensus Analyst Forecast Bias and Investors’ Information Acquisition in Stock Markets
(with Jasé Gabriel Astaiza, EAFIT)
European Accounting Review (2025): under revisionConsensus target prices aggregate the views of multiple analysts and project a security’s future price based on expectations about the firm’s fundamental value. As such, they constitute a freely available, transparent, and widely used source of information for both retail and institutional investors. However, these forecasts are well known to exhibit systematic bias. This paper examines the relationship between firm-level investor information acquisition and consensus analyst target price forecast bias. Our results highlight the central role of investor information acquisition in shaping consensus forecast bias. We find that greater investor information acquisition is associated with significantly lower consensus forecast bias, and that this effect is particularly pronounced for stocks that attract high media attention. However, this mitigating role is not universal: it varies with the source of information acquisition and depends on the prevailing level of economic and political uncertainty. Liquidity premium and return predictability in U.S. Inflation-linked Bonds Market
This paper discusses the predictive role of alternative measures of the liquidity premium of TIPS relative to Treasury bonds for government excess bond returns. The results show that the liquidity premium predicts positive (negative) TIPS (nominal Treasury) excess returns. The explanatory power of the TIPS liquidity premium is statistically significant and economically meaningful for short-term excess TIPS maturities and for long-term nominal Treasury bonds. I also find that the out-of-sample forecasting power of liquidity for nominal Treasury excess returns appears to have been addressed by the events during the recent financial crisis. By contrast, I have evidence of out-of-sample forecasting ability during both normal and bad times for TIPS’ excess returns. Available here.Financial capability and Financial well-being: A study among rural population in Colombia?
(with Sebastian Cardenas)
This paper explores the link between financial capability and the financial well-being of rural populations with limited credit and insurance services are limited and weak state support. We use data collected from 404 individuals living in rural areas of Tolima-Colombia to compute an indicator of financial well-being. Results from a regression analysis showed significant differences in the financial well-being level by various factors, including financial behaviors and attitudes, when controlling for demographic and socioeconomic information and financial characteristics.How optimal are fines in cartel cases? An evaluation of the case of Colombian fining policy.
In Colombia, the available sanctions for hard-core cartels include monetary fines against both business entities and individuals. For business entities, the maximum fine per offense charged is the greater of (i) 100,000 current legal minimum monthly wages, presently equal to 98,065 billion pesos or about USD 28.8 million or (ii) 150% of the profits derived from the anticompetitive conduct (Article 25 of Law 1340). The SIC sanctioned between 2009 and 2019 around eight hardcore cases imposing fines using the first criteria exclusively, arguing that the option permitting fines of up to 150% of the illicit profits is unavailable as a practical matter because the profits cannot effectively be calculated. In such circumstances, is the maximum sanction of 28.8 million sufficient to produce a deterrent effect? What happens when very large firms are involved? The purpose of this study is to analyze the deterrence property of this peculiar rule. In doing so, we expect to provide evidence in favor of applying the second criteria available in the law and propose a practical formula to compute it. Digital Wallet Adoption and Financial Fraud: A Staggered Difference-in-Difference analysis
(with Hernando Hernández, Roy Mersland and Kjetil Andersson)
This paper investigates the causal impact of digital wallet adoption on financial fraud. Using a unique monthly panel dataset from Colombia covering all regulated financial institutions between 2009 and 2022, we exploit the staggered introduction of digital wallets across banks within a difference-in-differences framework. Results show that digital wallet adoption significantly increases the number of reported fraud cases. However, the surge in digital transactions is substantially larger, indicating that the expansion of transactions far outpaces the rise in fraud incidents. As a result, the relative frequency of fraud per 100 digital transactions remains statistically unchanged. Heterogeneity analysis reveals asymmetric effects across fraud typologies: social engineering fraud rises persistently after adoption, while authorized push payment fraud declines. Identity theft and account takeover display moderate, platform-specific vulnerabilities. These results suggest that digital financial innovation reshapes the opportunity structure for crime, highlighting the need for regulatory frameworks that balance innovation and security through typology-sensitive approaches. FinTech and Digital Fraud: Evidence from Self-Reported Complaints on Social Media
(with Hernando Hernández)
FinTech has rapidly transformed financial markets and the banking sector through innovations that enhance the quality and efficiency of financial services. However, the rapid expansion of this industry may also create new opportunities for financial fraud. This study introduces a novel indicator of financial fraud occurrence based on individuals’ self-reported experiences on social media. Higher Rates, More Credit? A Difference-in-Differences Analysis of an Increase in the Lending Rate Cap
(con Rubén Salas, Felipe Ramos y Yudi Pereira)
This paper analyzes the effect of increases in the interest rate cap on the provision of popular productive credit in Colombia. Using a difference-in-differences approach with institution-level administrative data for low-amount credit markets, we show that an increase in the rate cap translates into higher borrowing costs rather than an expansion in the number or total amount of outstanding loans. This effect is mediated by the high degree of market concentration that characterizes the credit segments under study. Consequently, relaxing the usury rate ceiling does not always guarantee an expansion of credit supply in markets with high concentration.Continuous-time models with random coefficients: an application in finance (with Milena Hoyos and Daniela Cardenas)
A triple difference estimator with placebos to deal with systematic unobserved factors (with Milena Hoyos and Jorge Muñoz)
Gobernanza institucional y gobernanza de datos en finanzas abiertas. En: Inclusión financiera y Open Data: El caso colombiano. Editorial FCE-UNAL. (Capítulo de libro. Con Diana Forero)
Oportunidades y retos para la creación de valor a través de una política de datos abiertos. En: Inclusión financiera y Open Data: El caso colombiano. Editorial FCE-UNAL. (Capítulo de libro)