Working Papers
"Non-Profit Competition in Lending Markets: Evidence from Credit Unions" (with Andres Shahidinejad and Jordan van Rijn)
Last Updated: May 2025
Credit unions and banks frequently interact in lending markets, but there is limited evidence on the extent to which they compete. In selection markets, the non-profit incentives of credit unions need not strengthen competition, as profit deviation could lead to market segmentation by borrower risk. Using exposure to large bank mergers and geographic variation in credit union presence, we document competition between the two in auto lending markets. In geographies experiencing large changes in concentration due to bank mergers, banks increase and credit unions decrease interest rates. However, this response is accompanied by segmentation of credit risk across lender types.
"Loan Guarantees and Incentives for Information Acquisition"
Last Updated: January 2024
To address credit constraints in small-business lending markets, policymakers frequently use loan guarantees, which insure lenders against default. Guarantees affect loan prices by altering the effective marginal cost of lending but may create a moral hazard problem, weakening lenders’ information-acquisition incentives. I quantify these channels using data from the SBA 7(a) Loan Program. Guarantees benefit borrowers, on average, but redistribute surplus from low- to high-risk borrowers. Fixing government spending, an alternative policy with a 50% guarantee and a subsidy leads to an increase in borrower surplus and 0.1 percentage point (1.1%) decline in the program’s default rate.
"Merger Effects and Antitrust Enforcement: Evidence from US Consumer Packaged Goods" (with Vivek Bhattacharya and Gaston Illanes)
Last Updated: April 2024
(Revise and Resubmit at the American Economic Review)
We document the effects of a comprehensive set of mergers of US consumer packaged goods manufacturers on prices, quantities, and product assortment. Across a range of specifications, we find a small average price effect of mergers (-0.6% to 1.6%) but substantial heterogeneity in effects, with a standard deviation between 5.3–6.7 pp. Through a model of enforcement, we find that agencies challenge mergers they expect would increase prices more than about 4%–8%. Modest increases in stringency would reduce prices and the prevalence of completed price-increasing mergers, with minimal impacts on blocked price-decreasing mergers, at a significantly greater agency burden.
"Incentive Structures and Borrower Composition in the Paycheck Protection Program" (with Paul Kim)
Last Updated: November 2021
We study the design of the Paycheck Protection Program (PPP), a loan-forgiveness scheme that is implemented through private lenders and assists small businesses in keeping their employees on payroll during the COVID-19 pandemic. We develop a model of PPP lending to capture the government’s tradeoff between inducing bank participation and targeting funds for use on payroll. Using the model, we establish that both increasing subsidies and relaxing forgiveness standards are effective in expanding credit access to borrowers seeking smaller loans. However, their efficacy in targeting (i.e., providing funds to businesses who will use them on payroll) depends on the correlation between loan amounts and borrowers’ return to payroll. We test the implications of the model using policy variation from the PPP Flexibility Act, legislation that relaxed forgiveness standards. Consistent with the predictions of the model, the average loan amount falls by between 6 and 7% in the period following the policy change. Furthermore, marginal borrowers are more likely than inframarginal borrowers to use funds for payroll, so making forgiveness more accessible increases the average share of funds used for those purposes.
Work in Progress
"How Do Firms Respond to Changes in Investor Demand? The Role of Financial Market Power in Corporate Policy" (with Ali Sanati)