We provide novel evidence on the role of firms’ banking relationships with government banks (GOBs) during a climate-related shock when relief funds are unavailable. Using variation in the locations of rainfall shocks and firms' banking relationships, we find that firms maintaining exclusive banking relationships with GOBs (GOB firms) secure more debt relative to other firms during rainfall shocks. We do not find such effects for firms that maintain exclusive relationships with private banks, foreign banks, or maintain multiple banking relationships. We also find that GOB relationships are particularly beneficial for firms that are more vulnerable to rainfall shocks, have long-term relationships with GOBs, and are, at the same time, healthier compared to other firms. With regard to real effects, GOB firms invest more and remain profitable than other firms during rainfall shocks. Overall, our results highlight the benefits of GOB relationships for firms during climate shocks.

Awards: Won best paper award in Finance and Accounting track at 3rd Annual International Research Conference at IIM Lucknow (2023)

Conference Presentations and Acceptances:  NYU Stern-IIM Calcutta India Research Conference (2023); 7th Annual CECFEE Research & Policy Workshop (2023); Webinar series in Finance and Development (WEFIDEV) (2023); Sydney Banking and Financial Stability Conference (2023); New Zealand Finance Meeting (2023); 20th  Macroeconomics and Finance Conference at IGIDR Mumbai (2023); 3rd Annual International Research Conference at IIM Lucknow (2023); 18th Annual Conference on Economic Growth and Development at ISI Delhi (2023); 3rd Annual PhD students conference, Society for Economics Research in India (SERI) (2023); IFMB 2024 Conference, Nottingham Trent University, UK (2024); IMR Doctoral Conference at IIM Bangalore (2024); 2024 SWFA Annual Meeting, Las Vegas, US (2024); International Conference, organized by CITD, JNU (2024); 2024 BAFA Annual Conference, Doctoral Masterclasses, England (2024); 33rd European Financial Management Association (EFMA), Lisbon, Portugal (2024); Workshop on Banking and Finance in Emerging Markets, Helsinki, Finland (2024)

In this study, we propose the application of the GARCH-EVT-Copula model in estimating liquidity-adjusted value-at-risk (L-VaR) of energy stocks while modeling nonlinear dependence between return and bid-ask spread. Using the L-VaR framework of Bangia et al. (1998), we present a more parsimonious model that effectively captures non-zero skewness, excess kurtosis, and volatility clustering of both return and spread distributions of energy stocks. Moreover, to measure the nonlinear dependence between return and spread series, we use multiple copulas: Clayton, Gumbel, Frank, Normal, and Student-t. Based on the statistical backtesting and economic loss functions, our results suggest that the GARCH-EVT-Clayton copula is superior and most consistent in forecasting L-VaR compared with other competing models. This finding has several implications for investors, market makers, and daily traders who appreciate the importance of liquidity in market risk computation.

Conference Presentations and Acceptances: 11th India Finance Conference 2022, IIM Calcutta (2022); 5th SEBI-NISM Research Conference, Mumbai (2024)

The extant literature suggests that banks play an important corporate governance role, and influence firms' reporting choices and investments. Yet, we know very little about how the government banks' (GOBs) multidimensional goals influence these important corporate control decisions. Using an exogenous shock that empowers banks, but heterogeneously affects incentives to increase the level of scrutiny, I find that firms that have an exclusive relationship with GOBs (henceforth, GOB firms) misreport, inflate their earnings, and over-invest compared to other firms. Moreover, there is no significant improvement in GOB firms' performance after the shock. Rather, there is evidence of a significant increase in risk-taking, which induced them to engage in precautionary savings, compared to that of non-GOB firms. Overall, these results suggest that the GOBs' multidimensional goals allow GOB firms to misreport, and engage in sub-optimal activities. This explains why GOBs end up with a risky set of firms compared to other banks. 

Conference Presentations and Acceptances: 7th JAAF-ATP India Symposium, hosted by IIM Kozhikode (2024); IIMB-CCGS Corporate Governance & Sustainability Conference, IIM Bangalore  (2024); 30th Annual Conference of Multinational Finance Society, Vaasa, Finland (2024)

We exploit cross-sectional variations in regional financial intermediation together with a bankruptcy reform that empowers lenders while emphasizing time-bound reorganization over liquidation, to estimate its effects on credit expansion. We find post-reform, bank lending expands among poor-financial intermediation regions, with firms obtaining more bank debt at lower interest rates. These effects are stronger for larger, older, healthier, and more profitable firms. Mechanisms include private, highly capitalized, and healthy banks extending significantly more credit compared to government, lowly capitalized, and unhealthy banks. Real activities rise in poor-financial intermediation regions as firms boost investments, while households rely less on employment-guarantee schemes.

Awards: Won best paper award in Finance category, NDAP research paper competition, NITI Aayog, Government of India

Conference Presentations and Acceptances: NDAP research paper competition, NITI Aayogh, Government of India  (2022); 2nd Annual PhD students conference, SERI (2022); 11th India Finance Conference 2022, IIM Calcutta  (2022); Winter School 2022, Delhi School of Economics, New Delhi (2022); Asia Meeting of the Econometric Society 2023, IIT Bombay (2023); Research Scholars Day 2023, IIT Kanpur (2023); Research Scholar Workshop 2023, Jadavpur University (2023); 13th Financial Markets and Corporate Governance Conference, Deakin Business School (2023); 2nd Research Symposium on Finance and Economics, IFMR Graduate School of Business (2023); Annual Research Workshop on Insolvency and Bankruptcy, IIM Ahmedabad (2024)