Abstract: This paper quantifies how segmentation and bank market power in deposit markets shape the transmission of monetary policy. Using rate data differentiated by deposit account size, I document that uninsured rates are higher than insured rates, significant heterogeneity in banks' uninsured deposit exposure, and incomplete pass-through from policy rates to deposit rates. I develop and estimate a structural model of bank competition with segmented deposit markets by insurance status and spatial competition to understand these patterns and quantify their implications for monetary transmission. I find that uninsured deposits are slightly more elastic than insured deposits, while insured deposits have higher servicing costs. In counterfactual simulations of federal funds rate increases, I find that insured deposit outflows are three times larger than uninsured outflows and pass-through is higher for uninsured rates. Banks substitute toward wholesale funding, contracting lending as monetary policy tightens. Small banks experience larger balance sheet contractions following rate increases, while competitive markets exhibit stronger deposit pass-through. These findings demonstrate that accounting for deposit segmentation is essential for understanding monetary transmission: segmentation amplifies policy effects in competitive markets but dampens transmission in concentrated markets.

Abstract:  This paper examines how U.S. retail banks use zone rating- defining geographic zones with uniform deposit rates- and quantifies the implications for rate dispersion, competition, and bank profitability. I document heterogeneity in zone rating practices across banks: larger banks maintain broader zones covering expansive geographical areas and exhibit higher rate dispersion, while smaller banks employ more sophisticated zone pricing strategies relative to their geographic footprint. To understand the competitive effects of this pricing practice, I estimate a structural model of deposit competition with differentiated banks and zone rating. I develop novel instruments based on tiered zone rating structures to address endogeneity in deposit pricing, exploiting customized zone-level variation. In counterfactual experiments, moving all banks to finer zones raises average deposit rates and rate dispersion but reduces bank variable profits, with particularly large effects for smaller banks. These findings demonstrate that banking's competitive environment limits banks' ability to profit from geographic price discrimination, providing the first empirical evidence that market discrimination can weaken firm profitability if competition is sufficiently intense.

Abstract:  Using individual housing transaction data from Vancouver, this paper estimates the impacts of a recent empty homes tax. Our analysis reveals short-term effects, including sharp declines in both house prices and rents, accompanied by increases in sales, listings, and average time-on-the-market. Interestingly, nearly all of these short-term effects reverse in the long run, with the persistent drop in rents being the notable exception. The paper develops a model with owner-occupied homes, tenanted rental units, and empty houses to explain these novel findings. In the model, housing units are supplied by developers to local households for consumption and to investors as a store of wealth. Empty homes held by investors are classified as speculative vacancies, while frictional vacancies arise from search-and-matching frictions in the owner-occupied market. By discouraging speculative vacancies, a tax on empty homes can improve housing availability in the short term and permanently enhance affordability in the rental market. However, the tax may also discourage the supply of vacant homes for sale in the owner-occupied market (i.e., frictional vacancies), thereby increasing house prices and reducing homeownership in the long run.

Abstract:  This paper studies how bank mergers affect deposit pricing and bank stability. We use the 2019 merger between BB&T and SunTrust, which formed Truist Financial Corporation, to identify the local competitive effects of consolidation in U.S. retail banking. Before the merger, the two banks overlapped in some counties but not others, generating variation in exposure to the merger across local markets and separating the competition effect from the scale effect of becoming a larger institution. Difference-in-differences event-study estimates show that deposit spreads rise in overlap counties relative to counties served by only one predecessor bank after the merger. The effects are larger in markets with weaker outside competition, but they are modest on average. We also estimate a structural deposit-demand model and use it to organize counterfactual exercises under alternative market structures. The counterfactual implies that the merger lowered deposit rates in overlapping counties at consummation, with the implied effect attenuating over the post-merger years, consistent with rate-sensitive depositor demand, a more centralized pricing, and competitive responses by other institutions. A complementary bank-level analysis of Z-scores suggests modest short-run effects on bank stability.

Abstract:  The potency of cannabis products in Washington's market has been increasing over time due to both higher-potency flower and the introduction of concentrates, raising concerns about negative mental health outcomes documented in prior research. This paper investigates whether the potency increase is driven by consumer demand for higher potency products or by producers who may be innovating to create higher potency products at a lower cost, and quantifies the mental health impacts of these changes. Using administrative cannabis transaction data from Washington State's seed-to-sale tracking system (2014-2019), we employ hedonic regressions to analyze how potency affects wholesale and retail prices. At the retail level, we find that the increase in potency is driven by the increased potency of extracts, while at the wholesale level, THC content is strongly capitalized into prices. We also estimate consumer price sensitivity to understand cost pass-through from wholesalers to retailers and consumers. To examine the relationship between product potency and mental health, we link the transaction data to Washington's Behavioral Risk Factor Surveillance System (BRFSS), which surveys residents about cannabis use, self-reported mental health, and residential location, and employ a difference-in-differences design comparing individuals living within a 30-minute drive of recreational dispensaries (using average dispensary THC% as the continuous treatment measure) to those living farther away.

Abstract:  In this paper, we analyze the links between the agent’s reservation utility, bargaining power, and risk aversion in terms of their simultaneous effects on the structure of optimal static contracts. We compare the following principal-agent models in the symmetric and asymmetric information environments: the standard approach, which includes a participation constraint, and a multi-objective (MO) optimization approach in which the objective function is a convex combination of the expected utilities of the principal and the agent. The MO model does not include a participation constraint, but it includes a parameter for the agent’s bargaining power. We also study an Evolutionary Algorithm implementation of the static principal-agent model to support and extend our analytical results. We show that the numerical solution approximated by our implementation of an evolutionary algorithm is in line with the analytical solutions mentioned before. That is, for every admissible value of the agent’s reservation utility, there is a corresponding admissible value of the agent’s bargaining parameter, both in the MO approach and the EA implementation.