Research

Abstract: Leveraging an exogenous shock to lenders' ability to securitize, I demonstrate that securitization allows lenders to offload prepaying loans, leading to increased credit for borrowers with a high propensity to prepay. I find that borrowers place value on the ability to prepay, as evidenced by sensitivity to prepayment fees and significant bunching around prepayment fee thresholds. Borrowers who prepay secure more favorable terms on subsequent loans and support greater job creation compared to those who repay loans on schedule. These findings underscore an often overlooked benefit of securitization: its ability to enhance credit access for high-quality borrowers who may lack a strong credit history but whose activities contribute to economic growth.

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Presentations: Semifinalist, Best Paper Award - Financial Management Association (Oct 2023), Virginia Tech (Mar 2025).

Abstract: Technological innovation has spurred the growth of online banks specializing in different geographic areas. This study examines the role of securitization for government-backed small business loans. Online banks, which rely heavily on securitization, are disproportionately vulnerable to fluctuations in secondary market demand. Using a novel regulatory shock that reduced securitization profitability, we find that online banks reduce loan originations and increase interest rates. This credit reduction impacts the poorest and least-banked counties, where these lenders concentrate. When lending, online banks experience higher default rates but leverage larger government guarantees, imposing a cross-subsidy on traditional lenders and the government.

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Presentations: FDIC Bank Research Conference (Oct 2024), FDIC Spring Seminar Series (Jul 2024)*, Fintech and Financial Institutions Research Conference (Apr 2024)*, Midwest Finance Association (Mar 2024)*, FDIC Consumer Research Conference (Mar 2024), Utah State University (Feb 2024), Financial Management Association (Oct 2023), University of Virginia (Sep 2023)*, European Finance Association (Aug 2023)*,  University of Edinburgh Economics of Financial Technology Conference (Jun 2023)*, Eastern Finance Association (Mar 2023)*, The Federal Reserve Bank of New York (Dec 2022)*, Virginia Tech (Sep 2022).

Abstract: The bulk of existing literature suggests that concentrated lender-borrower relationships reduce information asymmetries and agency costs, resulting in benefits to borrowers. Using bank-merger events as a shock to debt concentration, we examine channels by which relationship concentration impacts borrowers. Contrary to the literature, we find that positive shocks to concentration result in decreased borrower credit, investment, and growth. We find that lenders reduce lending most to borrowers that are reliant upon them. This is evidence of lenders taking advantage of higher switching costs and reduced borrower bargaining power to exploit borrowers. Our findings suggest substantial costs of concentrated relationships. 

Presentations: Virginia Tech (Sep 2023).

Abstract: This study examines whether firms that engage in political activity have greater market concentration. Drawing on public choice theory, we argue that firms pursue political connections to obtain favorable policies that create barriers to entry and weaken competition. Using both univariate and multivariate tests, we find that lobbying firms exhibit market concentration levels that are 7.4% to 10.5% higher than those of non-lobbying firms. These results are robust to the inclusion of year and industry fixed effects, as well as a wide set of firm-specific controls. We further show that firms contributing to political action committees (PACs) display greater market concentration, regardless of party affiliation. The effect is strongest when contributions are directed toward winning candidates. To strengthen causal inference, we conduct a series of difference-in-difference tests around the guilty plea of lobbyist Jack Abramoff, which has been used in the literature as an exogenous negative shock to the pecuniary benefits associated with lobbying activity. We find that lobbying firms experience a significant decline in market concentration, relative to non-lobbying firms, around the event. Together, these findings provide evidence that political activity can causally shape competitive outcomes.

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