Abstract: At the onset of the Covid-19 outbreak central banks and supervisors introduced dividend restrictions as a new policy instrument aimed at supporting lending to the real economy and strengthening banks' capacity to absorb losses. In this paper we inspect the impact of the ECB dividend recommendation on bank lending and risk-taking. To tackle identification issues, we rely on credit registry data and a direct measure capturing variation in the compliance with the recommendation across banks in the euro area. The analysis also disentangle the confounding effects stemming from the wide range of monetary and fiscal policies supporting credit during the Covid-19 downturn and investigates their interaction with the dividend recommendation. We find that dividend restrictions have been an effective policy in supporting financially constrained firms. The effects on lending are larger for small and medium enterprises and for firms operating in Covid-19 vulnerable sectors. At the same time, we do not find evidence of a significant increase in lending to riskier borrowers or zombie firms.

Conferences: New Frontiers in Banking and Capital Markets (Rome, 2022); the 8th Paris Financial Management Conference (Paris, 2022);  the 7th Columbia SIPA/BPI Bank Regulation Conference (New York, 2023); Annual ECB Banking Supervision Research Conference (Frankfurt, 2023) (YouTube); 17th Belgian Financial Research Forum (Brussels, 2023); Federal Reserve Board Procyclicality Symposium: Measurement, Policy Implications, and Financial Stability (Washington, 2023); The 18th Annual Conference in Financial Economics Research by Eagle Labs (Israel, 2023).

Seminars: European Central Bank; Bank for International Settlements

Policy reports: A New Tool in the Box: Dividend Restrictions as Supervisory Policy Stimulus, Research Bulletin No. 107, European Central Bank; On the effectiveness of dividend restrictions as supervisory policy tool. SUERF Policy Brief No 617. 

Abstract: We study how the interaction between monetary and macroprudential policy shapes banks’ corporate lending and risk-taking using euro-area credit registry data and an unexpected monetary tightening that followed earlier macroprudential buffer increases. Higher capital requirements did not, on average, trigger additional lending cuts during the tightening. However, capital-constrained banks reduced lending by 0.39–0.41 percentage points for existing relationships and were 0.63–0.78 percentage points less likely to form new ones. They also transmitted policy rate increases more strongly to borrowers and curtailed risk-taking by lowering loan-to-value ratios and relying less on commercial real-estate collateral. Our findings highlight that the joint effects of macroprudential and monetary tightening depend critically on bank balance sheet conditions.

Seminars: Bank of England, Czech National Bank, European Central Bank, Bank for International Settlements, University of Ghent.

Policy reports: Doubling up? Bank lending and risk-taking when tightening both macroprudential and monetary policies. SUERF Policy Brief No. 1191.

Abstract: We match granular supervisory and credit register data to examine how banks’ exposure to interest rate risk affects the transmission of monetary policy to bank lending in the euro area. Exploiting the steepest and fastest rate hikes since the inception of the euro, we find that banks with larger net duration gaps - after accounting for hedging - cut corporate lending more and rebalance their portfolios away from longer-term, fixed-rate loans. This occurs as these banks anticipate weaker medium-term profitability and capital growth. Firms borrowing from these banks cannot fully substitute credit to other banks, resulting in a stronger overall contraction in borrowing.

Conferences: Inaugural Conference of the ChaMP Research Network on Challenges for Monetary Policy Transmission in a Changing World (YouTube) (Frankfurt, 2024); CEPR-BoP Conference on Financial Intermediation (Lisbon, 2024); International Banking, Economics and Finance Association (IBEFA) Conference (Seattle, 2024); First Annual Czech National Bank Workshop on Monetary and Financial Stability Policies in a Changing Economic Landscape (Prague, 2024); Third PSB Workshop on Banks and Financial Markets (Paris, 2024); Seventh Annual AWG and MPAG Workshop on Financial Stability Analysis of Large Changes in Interest Rates (Riga, 2024)

Seminars: European Central Bank, Bank for International Settlements, University of Ghent.

Policy reports: Mind the (duration) gap! Interest rate risk in the banking book and bank lending during a monetary tightening episode. Suerf Policy Brief N.

Abstract: Using granular data from the European corporate credit register, we examine how increases in macroprudential capital buffer requirements since the pandemic have affected bank lending behaviour in the euro area. Our findings reveal that, for the average bank, the buffer requirement increases did not have a statistically significant impact on lending to non-financial corporations. Furthermore, while we document relatively slower loan growth for banks with less capital headroom, also these banks did not decrease lending in absolute terms in response to higher requirements. These findings are robust in various specifications and emerge for both loan growth at the bank-firm level and the propensity to establish new bank-firm relationships. At the firm level, we document some heterogeneity depending on firm type and firm size. Firms with a single bank relationship and small and micro enterprises experienced a relative reduction in lending following buffer rate increases, although substitution effects mitigated real effects at the firm level. Overall, the results suggest that the pronounced macroprudential tightening since late 2021 did not exert substantial negative effects on credit supply. Hence, activating releasable capital buffers at an early stage of the cycle appears to be a robust policy strategy, since the costs of doing so are expected to be low.

Conferences:  First Annual Czech National Bank Workshop on Monetary and Financial Stability Policies in a Changing Economic Landscape (Prague, 2024).

Presentations: European Central Bank.

Abstract: This paper investigates how unrealized losses on banks’ amortized cost securities affect monetary policy transmission to bank lending in the euro area. Leveraging the sharp increase in interest rates between 2022 and 2023 and using granular supervisory data on security holdings and loan-level credit register data, we show that a one percentage point increase in the share of unrealized losses on amortized cost securities amplifies the contractionary effect of monetary tightening on lending supply by approximately one percentage point. This effect is more pronounced for weakly capitalized and less liquid banks, and those relying more on uninsured deposits. We further document that banks respond to growing unrealized losses by raising capital and passing through interest rate increases to depositors via higher deposit betas. Importantly, banks that employ interest rate hedging strategies can fully offset the negative impact of unrealized losses on credit supply. The contraction in lending is particularly severe for smaller borrowing firms, highlighting the uneven economic consequences of hidden balance sheet fragilities during a tightening cycle. 

Conferences: New Frontiers in Banking and Capital Markets (Rome, 2024); 47th European Accounting Association (EEA) Annual Congress (Rome, 2025)

Presentations: European Central Bank, Norwegian School of Economics. 

Abstract: We use a novel data set containing all corporate loans throughout the Eurozone to document a series of novel stylized facts on the relationship between collateral and the probability of default. First, we show that the pervasive empirical finding that riskier borrowers pledge collateral is driven by economists’ informational disadvantage relative to banks. Accounting for time-varying bank- and firm-specific risk factors produces negative correlations consistent with theory. Second, the relationship between pledging collateral and the probability of default is non-linear. Increasing the ex-ante collateral-to-loan ratio initially lowers the default likelihood but increases it as loans become overcollateralized. Third, this is driven by the riskiness of collateral. We estimate that an increase in the ex-ante collateral-to-loan ratio correlates with greater variance in the underlying collateral’s market value after loan origination. We develop a model featuring risk-neutral agents and risky collateral that provides intuition for these empirical patterns. Pledging risky collateral lowers lenders’ expected returns in case of default, leading them to demand more collateral to originate a loan but this diminishes a borrower’s return when a project is successful leading to less effort and a higher probability of default.

Seminars: European Central Bank.

Abstract: How do banks manage the behavioural maturity of non-maturing deposits (NMDs)? Using a unique confidential dataset, we investigate how banks model deposit maturities based on internal assumptions. Although NMDs are contractually floating-rate liabilities with zero maturity, banks reallocate them across different maturity buckets using models that reflect past customer behaviour. Notably, only 20% of NMDs are treated as having zero maturity, while about 10% are assigned maturities beyond seven years. We assess whether these modelling assumptions align with banks’ deposit structures. We find that banks with more volatile, interest rate-sensitive, and digitalised deposit bases tend to assign shorter maturities, consistent with underlying risks. However, during the recent monetary policy tightening, banks with more sensitive NMDs did not shorten assumed maturities or update models. These findings underscore the importance of timely and economically grounded calibration of NMD assumptions to support sound asset-liability management and safeguard financial stability.

Seminars: University of St. Andrews, European Central Bank.

Policy reports: The hidden maturity of non-maturity deposits: How banks model it. SUERF Policy Brief No. 1336

Abstract: We characterize how deposits outflows affects the loan supply during a large, and unexpected, increase in policy rates. By using the vast majority of bank-firm lending relationships in euro area countries, we find that banks experiencing deposit outflows reduce credit directly rather than increase the interest rate they charge. This credit restriction is stronger for longer maturity loans, but not for riskier borrowers. Banks with larger unhedged duration gaps experience the biggest contraction irrespective of their capital position, underscoring the primacy of liquidity and interest rate risk. Firms cannot offset lost credit by borrowing from other banks. 

Conferences: American Economic Association Annual Meeting (San Francisco, 2025); CEPR/Study Center Gerzensee European Summer Symposium in Financial Markets (Gerzensee, 2024); BIS/CEPR conference on ”Banks' liquidity in volatile macroeconomic and market environments” (Basel, 2024); IJCB conference on ”The transmission of monetary policy in a post-pandemic world” (Rome, 2024). First Annual Czech National Bank Workshop on Monetary and Financial Stability Policies in a Changing Economic Landscape (Prague, 2024).

Seminars: European Central Bank.

Policy report: As Interest Rates Surge: Flighty Deposits and Lending. SUERF Policy Brief No 954. Deposits and the transmission of monetary policy. Funcas SEFO Vol. 13, No. 3_May 2024 

Abstract: This paper investigates whether geopolitical risk causes a reduction in bank lending. In particular, it focuses on how the increase in geopolitical risk stemming from the Russian invasion of Ukraine affected euro area bank credit supply. Matching granular supervisory and credit register data and using a panel difference-indifference approach, the results show that banks with larger exposure to the increase in geopolitical risk cut lending significantly more than those with smaller exposure. Banks with greater exposure raised impairments despite exhibiting similar levels of credit distress to their peers, suggesting that the fall in lending was driven by uncertainty. Moreover, firms that were heavily reliant on banks with high exposure to geopolitical risk were unable to fully substitute this shortfall in credit by borrowing more from less affected banks, which significantly constrained firm investment and employment.

Conferences:  Eighth Annual Workshop of the Analysis Working Group of the ESRB (Munich, 2025); Central Bank of Ireland-UCD-CEPR Conference on Macro-finance and financial stability policies (Dublin, 2025).

Seminars: University of Ghent, University of Padua, European Central Bank

Abstract: We study whether female directors in banks' boardrooms influence lending decisions toward less polluting firms. By using granular credit register data matched with information on firm-level greenhouse gas emission intensities, we isolate credit supply shifts and find that banks with more gender-diverse boards provide less credit to browner companies. This evidence is robust when we consider different types of emissions and control for endogeneity concerns. We also show that better-educated female directors grant lower credit volumes to more polluting firms. The "greening" effect of a greater female representation in banks' boardrooms is stronger in countries with more female climate-oriented politicians. 

Other versions: ECB Working Paper No. 2022/2741. BIS Working Paper No. 1044. CEPR Working Paper No. 17650.

Conferences: International Finance and Banking Society Conference (Naples, 2022); Sustainable Finance and Governance Conference (Bath, 2022); New Frontiers in Banking and Capital Markets (Rome, 2022); 11th Financial Engineering Banking Society Conference (Portsmouth, 2022); European Economic Association Conference (Milan, 2022); Wolpertinger Conference (Madrid, 2022).

Seminars: Catholic University of the Sacred Heart; University of St. Andrews; Essex University; University of Strathclyde; University of Sydney; Sydney University of Technology; University of New South Wales.

Policy reports: Gender diversity in bank boardrooms helps combat climate change, SUERF Policy Brief, No 513.

Abstract: This paper investigates the impact of the capital relief package adopted to support euro area banks at the outbreak of the COVID-19 pandemic. By leveraging on confidential supervisory credit register data, we uncover two main findings. First, capital relief measures support banks' capacity to supply credit to firms. Second, not all measures are equally successful. Banks adjust their credit supply only if the capital relief is permanent of implemented through established processes that foresee long release periods and affect their ability to distribute dividends. By contrast, discretionary relief measures are met with limited success, possibly owing to the uncertainty surrounding their capital replenishment path or because they did not affect dividend policy. Moreover, requirement releases were more effective for banks with a low capital headroom over requirements and did not trigger additional risk-taking. These findings provide key insights on how to design effective bank capital requirement releases in crisis time. 

Other versions: ECB Working Paper No. 2022/2720. 

Presentations: Workshop on Sustainable Banking (Zurich, 2021); European Economic Association Conference (Milan, 2022);  International Finance and Banking Society Conference (Naples, 2022);  Wolpertinger Conference (Madrid, 2022); American Economic Association Annual Meeting (New Orleans, 2023); the 7th Columbia SIPA/BPI Bank Regulation Conference (New York, 2023).

Seminars: Bank of England; Banco Central of Brazil, European Central Bank, KU Leuven; International Monetary Fund.

Policy report: Bank Capital Buffers and Lending in the Euro Area during the Pandemic, ECB Financial Stability Review, Special Feature A, November 2021. 

Abstract: Decentralised finance (DeFi) lending protocols have experienced significant growth recently, yet the motivations driving investors remain largely unexplored. We use granular, transaction-level data from Aave, a leading player in the DeFi lending market, to study these motivations. Our theoretical and empirical findings reveal that the search for yield predominantly drives liquidity provision in DeFi lending pools, whereas borrowing activity is mainly influenced by speculative and, to some extent, governance motives. Both retail and large investors seek potential high returns through market movements and price speculation, however the latter engage in DeFi borrowing relatively more than the former also to influence protocol decisions and accrue more significant governance rights. 

Other versions: BIS Working Paper No. 1183. CEPR Discussion Paper 13358. 

Conferences: ToDeFi - Torino Decentralized Finance Conference at Collegio Carlo Alberto (Turin, 2024); 4th Annual CBER Conference (New York, 2024); Crypto-Asset Monitoring Expert Group (CAMEG) 2024 conference (Frankfurt, 2024).

Policy report: Decoding DeFi lending: Motivations, risks, and investor behaviours. VoxEU Column.

Abstract: While banks are expected to draw down regulatory capital buffers in case of need during a crisis, we find that banks kept at safe distance from regulatory buffers during the pandemic by pro-cyclically reducing corporate lending. By exploiting granular credit register data, we show that banks with little headroom above their buffers reduced credit supply and that this behavior was amplified for banks that entered the crisis with larger un-drawn credit lines. Affected firms were unable to fully re-balance their borrowing needs to other banks and responded to the credit shock by reducing headcount, although state public guarantees mitigated banks' procyclical  behaviour and its real effects at firm level. These findings raise concerns that the capital buffers introduced by Basel III may not be as countercyclical as intended.

Other versions: ECB Working Paper No. 2022/2644. 

Conferences: European Economic Association Conference (Milan, 2022); American Economic Association Annual Meeting (New Orleans, 2023)

Seminars: Bangor University; Bank of England; Central Bank of Brazil; European Commission; International Monetary Fund; Sveriges Riksbank; University of Strathclyde; University of Udine.

Policy report: Bank Capital Buffers and Lending in the Euro Area during the Pandemic, ECB Financial Stability Review, Special Feature A, November 2021; Caution: Do not cross! Distance to regulatory capital buffers and lending in Covid-19 times, SUERF Policy Brief No. 331.

Abstract: Does capital headroom – i.e. the difference between capital ratios and capital requirements – affect banks’ cost of equity? Using quarterly data on listed euro area banks from Q4 2014 to Q1 2025, we document a robust negative relationship: a one percentage point increase in capital headroom reduces the cost of equity by 10–12 basis points. This effect is driven by capitalisation rather than requirements and is also non-linear: the reduction in the cost of equity is strongest for banks with low headroom and weakens as headroom increases. Maintaining adequate headroom above minimum requirements lowers equity costs by enhancing resilience which is valued by investors. 

Abstract: What do 120 years of data say about the relationship between geopolitical risk and bank solvency? We find that a two standard deviation increase in a geopolitical risk index is associated with a decrease in the bank capital-to-asset ratio of around 0.2 percentage points. The effect is non-linear: only very high geopolitical risk leads to a sizeable decline in bank capitalisation, while more moderate increases of the index exert a negligible impact. This suggests that only major geopolitical events are likely to affect bank solvency to a degree that can endanger financial stability. 

Policy report: Geopolitical risk and its implications for macroprudential policy. Macroprudential Bulletin 28 April 2025.

Abstract: Do negative interest rates affect banks' cost efficiency? We exploit the unprecedented introduction of negative policy interest rates in the euro area to investigate whether banks make a virtue out of necessity in reacting to negative interest rates by adjusting their cost efficiency. We find that banks most affected by negative interest rates responded by enhancing their cost efficiency. We also show that improvements in cost efficiency are more pronounced for banks that are larger, less profitable, with lower asset quality and that operate in more competitive banking sectors. In addition, we document that enhancements in cost efficiency are statistically significant only when breaching the zero lower bound (ZLB), indicating that the pass-through of interest rates to cost efficiency is not effective when policy rates are positive. These findings hold important policy implications as they provide evidence of a beneficial second-order effect of negative interest rates on bank efficiency. 

Other versions: ECB Working Paper No. 2022/2718. 

Seminars: European Central Bank.

Policy report: Cost efficiency in the euro area banking sector and the negative interest rate environment, SUERF Policy Brief No. 474.

Abstract: Economic diversification increases the level of democracy and leads to greater output stability. This is because diversification is associated with an increased share of the population organized into interest groups that compete to pressure governments to pursue policies favouring their particular group. The increase in the share of the population organized in this way is indicative of an increase in the level of democracy. As diversification and the level of democracy (number of interest groups) increases, the government must pursue policies aimed at satisfying the largest number of groups, which limits its scope to implement policies that destabilize output growth. Empirical support for these hypotheses is provided from applying dynamic and heterogeneous panel data estimation techniques to a panel of 117 countries over 1995–2015. The results show a positive and significant relationship between economic diversification and democracy, on the one hand, and between diversification and output stability, on the other hand. Moreover, the positive impact of economic development on democracy and output volatility is conditional on development being accompanied by economic diversification. 

Abstract: This study examines whether the level of environmental disclosure in banks’ financial reports matches less brown lending portfolios. Using granular credit register data and detailed information on firm-level greenhouse gas emission intensities, we find a negative relationship between environmental disclosure and brown lending. However, this effect is contingent on the tone of the financial report. Banks that express a negative tone, reflecting genuine concern and awareness of environmental risks, tend to lend less to more polluting firms. Conversely, banks that express a positive tone, indicating lower concern and awareness of environmental risks, tend to lend more to polluting firms. These findings highlight the importance of increasing awareness of environmental risks, so that banks perceive them as a critical and urgent pressing threat, leading to a genuine commitment to act as environmentally responsible lenders. 

Other versions: ECB Working Paper No. 2023/2872. BIS Working Paper No. 1143. CEPR Working Paper No. 18623.

Conferences: AIDEA 2023 XL National Conference (Salerno); ADEIMF 2023 Summer Conference (Florence);  Essex Finance Centre (EFiC) 2023 Conference in Banking and Corporate Finance (Gaeta); Yunus Social Business Centre Conference in Sustainable and Socially Responsible Finance (Imola).

Awards:  Third ADEIMF 2023 best paper award at the ADEIMF 2023 Summer Conference held in Florence (Italy).

Seminars: European Central Bank.

Abstract:  This paper investigates ex-ante factors influencing international bank acquisition of FinTech companies from 2010-2018. Using hand-collected data, we show that banks boards with a larger female presence as well as those that have CEOs with longer tenure are more likely to pursue FinTech acquisitions. The financial performance also matters as banks with greater capital strength and liquidity are more likely to be acquirers. In line with prior expectations, banks with higher IT spending, suggesting greater in-house development of digital solutions, are less likely to target FinTech acquisitions. In addition, younger CEOs and banks with lower IT spending are also found to be more likely to make multiple FinTech acquisitions. The nationality diversity in the boardroom matters for cross-boarder bank-FinTech deals. 

Abstract: Using an event study approach, this paper investigates the stock market reaction to the unexpected announcement of a windfall tax on banks’ extra profits. We show that investors negatively perceive the introduction of the tax, with more pronounced reactions for banks expected to be more highly burdened. This evidence is corroborated when we investigate the cross-sectional determinants of banks’ returns and cumulative abnormal returns. Overall, the results suggest that investors negatively price excess profits taxes and contribute to our understanding of how stock markets respond to tax policy changes. 

Presentations:  European Society for Banking and Financial Law (Milan, 2023)

Abstract: We investigate whether the regulatory improvements made in the aftermath of the global financial crisis have been effective in limiting bank downward window dressing by means of repos in the United States. We find that a stricter application of the Basel III regulation wipes out incentives to engage in window dressing to bolster the level of leverage Tier 1 ratio at quarter-end. We also shaw that persistency of window dressing is related to the computation of the Federal Deposit Insurance Corporation assessment base, which motivates banks to engage in window dressing to reduce the deposit insurance premium.

Abstract: We match firm-corporate governance characteristics with firm-level carbon dioxide (CO2) emissions over the period 2009–2019 to study the relationship between gender diversity in the workplace and firm carbon emissions. We find that a 1 percentage point increase in the percentage of female managers within the firm leads to a 0.5% decrease in CO2 emissions. We document that this effect is statistically significant, also when controlling for institutional differences caused by more patriarchal and hierarchical cultures and religions. At the same time, we show that gender diversity at the managerial level has stronger mitigating effects on climate change if females are also well-represented outside the organization, e.g. in political institutions and civil society organizations. Finally, we find that, after the Paris Agreement, firms with greater gender diversity reduced their CO2 emissions by about 5% more than firms with more male managers. 

Other versions: BIS Working Paper No. 977; CEPR Working Paper No.17159; ECB Working Paper No. 2022/2650.

Media coverage: Bloomberg; World Economic Forum

VoxEU: Combating climate change: The role of female managers in the workplace

Abstract: Do climate-oriented regulatory policies affect the flow of credit towards polluting firms? We match loan-level data to firm-level greenhouse gas emissions to assess the impact of the Paris Agreement. We find that, following this agreement, European banks reallocated credit away from polluting firms in relative terms. Specifically, euro area banks’ loan share to more polluting firms decreased by about 3percentage points compared to less polluting (or “green”) firms after the 2015 Paris Agreement (COP21). This result is stronger for banks that are well capitalized, have lower credit quality, and are less profitable. 

Other versions: ECB Working Paper No. 2021/2550.

VoxEU: Financing climate change: International agreements and lending.

Abstract: We investigate the impact of capital requirements on bank lending across institutional sectors, focusing on their transmission channel and the interaction with monetary policy. By employing confidential loan-level data for the euro area, we find that the reaction of banks to capital surcharges for Other Systemically Important Institutions (O-SII) depends on the level of the required buffer and the institutional sector of the borrowing counterpart. Tighter requirements correspond to stronger lending contractions with targeted banks curtailing their lending mostly towards credit institutions. Loan supply to non-financial corporations is almost unchanged, mainly as a result of the incentives embedded in the ECB's targeted long-term refinancing operations. Our results provide evidence on the interaction between macroprudential and monetary policy, and the positive effects of combining two different sets of incentives to support the resilience of the banking system and credit supply to the real economy. 

Other versions: ECB Working Paper No. 2020/2440.

Abstract: This paper analyses the impact of the Banking Union on European bank credit risk. Specifically, we investigate the effect that the establishment of the Single Supervisory Mechanism has had on the credit risk of the banks it supervises in comparison to financial institutions that are still supervised by National Supervisory Authorities. We analyse a sample of 746 European banks over the period 2011–2018, by means of a difference-in-differences methodology. We provide empirical evidence that Single Supervisory Mechanism supervised banks reduced credit risk exposure compared to banks supervised by National Supervisory Authorities, suggesting that the Banking Union has successfully reduced the riskiness of the European banking sector. Our results passed a battery of robustness tests that support the reliability of our analysis. Our contribution sheds light on the benefits of centralised versus decentralised supervision, on the effectiveness of the current supervisory system in Europe, and on its impact on European bank risk. 

Abstract: Using a sample of 440 Italian banks over the period 2007–2016, we find that low interest rates motivate banks to expand their fee and commission income and to restructure their securities portfolios. A granular breakdown suggests that banks grow noninterest income in various ways, including portfolio management, brokerage and consultancy services and increase fee income from current account and payment services. In addition, banks rebalance securities portfolios away from those “held for trading” to securities “available for sale” and “held to maturity.” Our findings allude to different behavior between large and small banks: while larger banks increase brokerage, consultancy and portfolio management services, smaller banks generate fees from customer current accounts. 

Abstract: The modernization hypothesis attributes democracy to higher incomes. The hypothesis has been controversial with claims of no relationship or opposite causality. Using data on a large sample of countries over the period from 1995 to 2015, we show empirically that the hypothesis is valid by studying the role of diversified production and interest-group competition. Increases in income associated with production diversification foster the emergence of competing organized interest groups representing the different diversified sectors. The interest-group competition underlies democracy by restraining rent seeking for benefits that would otherwise be sought through single-decision-maker authoritarian government. 

Abstract: We reconsider the Beladi et al. (1993) technique to measure expectations in hyperinflation episodes by allowing money to be substitutable with foreign assets as well as goods. We determine new correctness conditions for adaptive and rational expectations formation in this context and show that, taking into account these conditions, the data for the German hyperinflation of the 1920s is consistent with rational expectation formation. 

Abstract: Since 2012 several central banks have introduced a negative interest rate policy (NIRP) aimed at boosting real spending by facilitating an increase in the supply and demand for bank loans. We employ a bank-level dataset comprising 6558 banks from 33 OECD member countries over 2012–2016 and a matched difference-in-differences estimator to analyze whether NIRP resulted in a change in bank lending in NIRP-adopter countries compared to those that did not adopt the policy. Our results suggest that following the introduction of negative interest rates, bank lending was weaker in NIRP-adopter countries. The result is robust to a wide range of checks. This adverse NIRP effect appears to have been stronger for banks that were smaller, more dependent on retail deposit funding, less well capitalized, had business models reliant on interest income, and operated in more competitive markets. 

Abstract: By investigating the influence of negative interest rate policy (NIRP) on bank margins and profitability, this paper identifies country- and bank- specific characteristics that amplify or weaken the effect of NIRP on bank performance. Using a dataset comprising 7,359 banks from 33 OECD member countries over 2012–16 and a difference-in-differences methodology, we find that bank margins and profits fell in NIRP-adopter countries compared to countries that did not adopt the policy. Moreover, this adverse NIRP effect depends on bank specific-characteristics such as size, funding structure, business models, assets repricing and product – line specialization. The effectiveness of the pass-through mechanism of NIRP can also be affected by the characteristics of a country's banking system, namely, the level of competition and the prevalence of fixed/floating lending rates. 

Presentations: 7th Bundesbank Workshop Banks and Financial Markets (Eltville, 2017); XXVI Edition of the International Rome Conference on Money, Banking and Finance (Palermo, 2017); 11th International Accounting and Finance Doctoral Symposium (May, 2018).