with Jin Cao (Norges Bank)
While a large literature has examined how bank credit shocks affect firms or households, it has overlooked the possibility that such shocks may simultaneously impact both. In this paper, we overcome this limitation and demonstrate that doing so is crucial for assessing the real impact of a credit market disruption. To this end, we construct a novel dataset linking Norwegian employees to their employers and their respective bank relationships. Using these data, we show that credit shocks simultaneously affecting firms and individuals have a significantly larger impact than the combined effects of credit shocks affecting only firms or only individuals. Specifically, individuals’ labor income and consumption decline by 6% when both they and their employer face a credit shock compared to 1-2% when only they or only their employer face a credit shock. This amplification effect arises as personal credit constraints hinder individuals' consumption smoothing and job search, thereby amplifying the adverse effects of their employer's credit constraints. Our findings suggest that this mechanism influences the aggregate transmission of a credit market disruption, with important implications for bank regulation and the design of macroprudential policies.
Presentations (including scheduled): Imperial College Business School, European Central Bank, Swiss Finance Institute "Rising Scholars in Finance Conference", Florence School of Banking and Finance "Finance in the Tuscan Hills Workshop", Bank of England, Norges Bank, Econometric Society European Winter Meeting, University of Vaasa "Banking Research Workshop", CEMLA Annual Conference, KU Leuven, Ghent University, International Workshop on Financial System Architecture and Stability, LSE "Macro Workshop", ZEW Annual PhD Workshop on “Challenges to the European Monetary and Financial System”, University of St. Andrews Business School "6th Conference on Contemporary Issues in Banking"
Awards: ECB Lamfalussy Fellowship
The Disciplining Effect of Bank Supervision: Evidence from SupTech
with Hans Degryse (KU Leuven) & Bernardus Van Doornik (Central Bank of Brazil)
Regulators around the world increasingly rely on supervisory technologies (SupTech) to enhance bank supervision, but their potential role in disciplining risky bank behavior remains unclear. We address this knowledge gap using unique data from the SupTech application of the Central Bank of Brazil. We show that, after a SupTech event, banks reveal inconsistencies in their risk reporting and tighten credit to less creditworthy firms, effectively reducing risk-taking. This credit tightening in turn has small spillovers on less creditworthy firms borrowing from affected banks. Our results can be explained by a moral suasion channel, offering novel insights into the role of SupTech in bank supervision.
Presentations (including scheduled): AFA, BIS-CEPR-SCG-SFI Conference on Financial Intermediation, MoFiR Workshop on Banking, ECB Banking Supervision Conference, Cambridge Annual Conference on Alternative Finance, Bank of England, JFI-CFAR-UNC-Gothenburg Conference on Frontier Risks, Financial Innovation and Prudential Regulation of Banks, Endless Summer Finance Conference, BOFIT Workshop on Banking and Finance in Emerging Markets, ACPR Conference on New Financial Actors, New Technologies and Risks, AEFIN, CUNEF Workshop on Current Topics in Finance, IBEFA-WEIA, FMA, Norges Bank, Bank of Italy-Bocconi University-CEPR Conference on Financial Stability and Regulation, BIS, NHH Norwegian School of Economics, KU Leuven, Belgian Financial Research Forum, 31st Finance Forum, EBA Policy Research Workshop, EU–SFDA Policy Research Workshop on Digital Finance, IWH-FIN-FIRE Workshop on Challenges to Financial Stability, ECB-IBRN-University of Glasgow Workshop on Financial Stability and Regulation, Central Bank of Ireland
Banking on Deposit Relationships
with Jin Cao (Norges Bank) & Emilia Garcia-Appendini (Norges Bank & University of St. Gallen)
Theory suggests that, by lending to a firm, inside banks gain an informational advantage over non-lender outside banks. This informational gap hinders borrowers from switching lenders, as outside banks face a winner's curse, allowing inside banks to hold up borrowers and extract informational rents. Using unique data on all firm-bank deposit and lending relationships in Norway, we show that deposit relationships between firms and outside banks mitigate inside banks' informational monopoly, thereby attenuating hold-up. This result holds using quasi-random variation in deposit relationships induced by the deposit insurance threshold, and is driven by the fact that firms' deposit account activity provides valuable information to outside banks (not cross-selling). Overall, our paper offers the first empirical evidence that deposit relationships impact lender competition, and provides a novel perspective on the two-sidedness of the banking sector.
Presentations (including scheduled): WFA, EFA, FIRS, BIS-CEPR-SCG-SFI Conference on Financial Intermediation, Federal Reserve-FDIC-CSBS Community Banking Research Conference, CEPR Paris Symposium, Bank for International Settlements, IBEFA-WEIA, FMA, FEBS, IMFB, University of Zurich, Annual Meeting of the Swiss Society for Financial Market Research, Banco de Portugal, Norges Bank, University College Dublin, KU Leuven, Belgian Financial Research Forum, Benelux Corporate Finance Conference, EUROFIDAI-ESSEC Paris December Finance Meeting, Nordic Central Banks Research Meeting, Banca d'Italia-Collegio Carlo Alberto-Norges Bank Conference on Heterogeneous Households, Firms and Financial Intermediaries, BOFIT-LaRGE-Gabelli School of Business Workshop on Banking and Institutions, NHH Norwegian School of Economics, IFABS, Central Bank of Mexico, CEPR-BAFFI-CAREFIN Conference on Information, Contracts, and Firms, University of Bristol, Bayes Business School, Annual Conference of the Banco Central do Brasil
Paper | VoxEU Column | Norges Bank Column | Video Presentation
The Supply Chain Spillovers of Private Equity Buyouts
The impact of private equity (PE) buyouts on target firms is well-documented, yet empirical evidence on their impact across the supply chain remains scarce. We address this gap by leveraging unique production network data to examine how supply chains contribute to PE investors’ ability to create and extract value. We show that, on average, suppliers of PE-backed firms outperform their peers due to increased demand for inputs from PE-backed customers—not due to alternative mechanisms such as knowledge spillovers. In contrast, during economic downturns, while PE-backed firms outperform their peers even more strongly, their suppliers show no signs of outperformance. This can be attributed to PE investors exerting greater pressure on suppliers and more actively reconfiguring supply chains to achieve cost savings for their portfolio companies during periods of economic distress. Finally, beyond their impact on suppliers, we also show that PE buyouts create crowding-out effects for competitors that rely on common suppliers.
Presentations (including scheduled): AFA, EEA, Ninth Annual M&A Research Centre Conference, ECGI-UPenn-LSE-Oxford-Goethe University Conference on The Law and Finance of Private Equity and Venture Capital, Université Paris-Dauphine Ownership, Control, and Performance Conference, LBS Trans-Atlantic Doctoral Conference 2025, HEC Liège, EBRD, Imperial College, KU Leuven, Durham Finance Conference, Third Aarhus Workshop on Strategic Interaction in Corporate Finance, Sixth Edinburgh Corporate Finance Conference, 2025 ENTFIN Conference, EBA Policy Research Workshop on “Bridging Capital and Growth”