Thank you for visiting my website!
I am a fifth-year Ph.D. Candidate in Economics at UC San Diego.
My research focuses on Macroeconomics, Monetary Economics, and Banking.
Curriculum Vitae: CV
Email: dochoi@ucsd.edu
Thank you for visiting my website!
I am a fifth-year Ph.D. Candidate in Economics at UC San Diego.
My research focuses on Macroeconomics, Monetary Economics, and Banking.
Curriculum Vitae: CV
Email: dochoi@ucsd.edu
Selected Work in Progress
Unintended Risks of Bank Capital Regulations
[Abstract] This paper documents that nonbank financial intermediaries (NBFIs) have regained and expanded their role in U.S. mortgage origination, with their share now above its pre–Great Financial Crisis level. Using new loan-level evidence, I show that NBFI-originated mortgages exhibit higher default rates and systematically looser underwriting standards than comparable bank-originated loans. To rationalize these facts, I develop a general equilibrium model in which banks and NBFIs endogenously choose mortgage rates and underwriting stringency but differ in funding and regulation. Banks fund with deposits and face capital requirements, whereas NBFIs rely on market-based funding and only partially internalize default risk. The model predicts that tighter bank capital requirements shift marginal lending toward NBFIs, raising the aggregate mortgage default rate. In addition, capital regulation can amplify macro-financial shocks by deepening downturns when stress originates in the NBFI sector and by increasing default risk after expansionary demand shocks through endogenous credit reallocation toward NBFIs.
Why Is Monetary Policy Less Effective at Low Interest Rates: The Role of Banking Sector Profitability
[Abstract] This paper investigates the transmission of monetary policy and its effectiveness through the banking sector, focusing on the responses of loan and deposit rates to nominal interest rate changes in a low policy rate environment. The conventional view on this is that when the policy rate is cut in a low-interest rate environment, loan rates continue to decline but the deposit rate does not respond. This erodes banks' profit margin, undermines equity, thereby limits their lending capacity. However, empirical analysis of the U.S. banking sector reveals that policy rate cuts are not transmitted into lower loan rates when the deposit rate reaches zero. Moreover, profit margins and equity remain stable despite additional policy rate cuts. Instead, monetary policy begins to lose effectiveness well above the zero lower bound because loan rates become less responsive to further policy rate reductions, which on the one hand stabilizes banks by preserving their margins and equity but on the other hand dampens incentives for increased loan demand.
Does Regulation Foster Unregulated Territory? Evidence from the United States Mortgage Market
[Abstract] This paper studies how unregulated intermediaries respond to regulation and whether they assume more risk. Specifically, we examine the impact of bank regulation on the U.S. mortgage market, focusing on the Liquidity Coverage Ratio (LCR) regulatory event. By leveraging regional variation in regulatory exposure, our analysis shows that the market share of the shadow (unregulated) banking sector has increased in areas where regulated banks held a strong presence before the introduction of regulation. This expansion is characterized by increased loan origination and household prices.