WORKING PAPERS
Consumer Loans, Heterogeneous Interest Rates, and Inequality (with Marco Bonomo, Tiago Cavalcanti, Fernando Chertman, Andrew Hannon, Cezar Santos)
Using confidential loan-level data linked to matched employer--employee records from Brazil, we show that low-income individuals pay significantly higher interest rates even after controlling for default risk and borrower characteristics. We develop a life-cycle model with endogenous default, two credit types, heterogeneous occupations, and microfounded markup from logit bank competition with income-varying switching frictions. Eliminating non-default spreads raises average welfare by 3.0% of annual consumption, with low-income gains exceeding 20%. The 2013 Loan Portability reform---a switching-cost reduction---raised welfare modestly, as gains accrued mainly to payroll borrowers dominated by retirees. Targeted reforms generate macroeconomic and distributional effects.
Cutting Switching Costs in Credit Markets: The Impact of Brazil's 2014 Loan Portability Reform (with Marco Bonomo, Tiago Cavalcanti, Fernando Chertman)
We study whether reducing borrowers' costs of switching lenders strengthens competition in consumer credit markets. We exploit Brazil's 2013 loan portability reform, which standardized refinancing across banks and reduced borrower switching frictions. Combining this nationwide reform with cross-sectional variation in local banking competition, we use an event-study difference-in-differences design to estimate effects on loan prices and credit volumes. The reform lowers payroll-loan interest rates and increases credit, with larger effects in less concentrated markets, where borrowers have more credible outside options. Rate reductions are strongest for borrower groups most exposed to portability, particularly civil servants. Bank markups also decline, consistent with increased competitive pressure rather than a demand-driven response. These findings show that lowering borrower switching costs strengthens market contestability and disciplines incumbent lenders beyond borrowers who actually switch.
Pix and the Cost of Consumer Credit: Information, Competition, and Interest-Rate Inequality
Brazil's instant-payment system, Pix, was adopted by almost the entire adult population within four years of its 2020 launch. Existing work shows that it moved quantities - deposits, loans, firm entry, wages - measured at the municipality or bank level. This paper asks instead what Pix did to the price of consumer credit and to the dispersion of that price across borrowers, using person-level data that link Pix transactions to the universe of the Brazilian credit registry (SCR) and to formal-sector earnings (RAIS) over 2023--2024. Two findings emerge. First, contrary to a simple cheaper-credit hypothesis, greater Pix intensity is not associated with a lower average interest burden; the conditional association is small and positive, and instrumenting reinforces rather than overturns it. Second, and more robustly, Pix intensity is associated with a substantially compressed cross-borrower distribution of credit costs, and the reduction in interest burden is concentrated among low-income borrowers. Taken together the evidence is consistent with Pix operating on the extensive margin - expanding access and reallocating who borrows and on what terms - rather than uniformly lowering prices. We interpret the results through a heterogeneous-agent model with endogenous default in which a payment-technology parameter governs both lender screening noise (an information channel) and switching frictions (a competition channel), and show that the two channels have opposite implications for dispersion, which helps rationalise the pattern in the data.
PUBLICATIONS
A POLÍTICA FISCAL EXPANSIONISTA QUE CONTRAI! (with Celso Costa Jr, Vladimir Teles)
No presente trabalho, analisamos a desoneração do imposto sobre o consumo de bens duráveis com o objetivo de fornecer contribuições em duas direções: a) estimar e calibrar um modelo dynamic stochastic general equilibrium (DSGE) de pequena escala que incorpore esse aspecto; e b) analisar o impacto específico dessa política nas principais variáveis macroeconômicas à luz do modelo. Os resultados sugerem que a redução da alíquota do imposto sobre produtos industrializados (IPI) sobre bens duráveis não foi a política mais adequada para estimular a atividade econômica, pois contrai em vez de expandir o produto total. Melhor seria uma redução da alíquota do imposto indireto para toda a economia.
WORK IN PROGRESS
The Price of Relief: Interest-Rate Caps, Household Debt Service, and the Distribution of Credit Costs in Brazil
Does Better Information Close the Gap? The Poor, Interest Rates, and Brazil's Positive Credit Bureau (with Fernando Chertman)