Working Papers


Abstract: Using data on anti-takeover provisions (ATPs) and top management characteristics hand-collected from IPO prospectuses, we analyze the effect of the pre-IPO innovativeness and the top management quality of private firms on the number and strength of ATPs in IPO firm charters. We test the “long-term value creation” hypothesis, predicting that more innovative private firms and those with higher top management quality will have more (and stronger) ATPs in their charters; and the “management entrenchment” hypothesis, predicting the opposite. Our results support the former hypothesis. We show causality using an IV analysis using the leniency of patent examiners as an instrument. 

Abstract:  We examine the redistributive impact of 30-year mortgage and federal funds rates on mortgage lending between 1995 and 2021. Between 2008 and 2014, the Fed deployed Quantitative Easing (QE) by purchasing mortgage-backed securities, intendedly lowering mortgage rates. We find that lending is regressive pre-QE, becomes progressive during the QE era, and then reverts to being regressive following the QE's conclusion until 2019. Nonbank lending becomes regressive when the federal funds rate increases between 2015 and 2019, and this pattern persists during the pandemic. In contrast, while banks lend regressively until 2019, they refinance progressively during the pandemic. 

Abstract:  We study how compliance costs of a data privacy law, the California Consumer Protection Act (CCPA), affects mortgage finance. Lenders pass compliance costs to borrowers by raising interest rates, making the average prime mortgage costlier by $4,350. The CCPA imposes compliance costs of $880,000 on the average bank, while nonbanks share the costs with government-sponsored enterprises. Although loan risk increases, competition from nonbanks prevents banks from pricing the risk. Banks respond by reducing credit by 3.4%. The fixed compliance burden creates economies of scale in lending, leading to regressive credit. Market-based finance crowds out bank finance due to the compliance costs. 

Abstact: We model and test spatial price discrimination in Small Business Administration (SBA) 7(a) loans, where a federal guaranty neutralizes loan-specific risk. The SBA distinguishes between Preferred Lender (PLP) and non-PLP banks. While PLP take credit decisions on loan applications, the SBA takes the decisions for non-PLP. Our model predicts that only PLP banks charge nearby-firms higher rates than distant firms by appropriating the firms’ transportation savings from visiting rival banks. We find evidence consistent with this prediction. Further, while SBA’s technological improvements, starting in 2014, increase overall lending distance, PLP spatial pricing worsens. 

Abstract:  I examine the relationship between mobility and positive house equity. The Tax Reform Act of 1986 (TRA) eliminated interest tax deductions for personal loans, except for mortgages, increasing mortgage demand. The average mortgage debt increased by $10,000, reducing house equity by 5.4% and, consequently, reducing mobility by 2%. The effect was more pronounced in regions with depressed economic conditions. Homeowners with higher income and financial assets experienced a greater decline in mobility due to greater indebtedness. However, the mobility of homeowners with higher education remained unaffected. While renter mobility increased post-TRA, homeowner mobility declined due to lower house equity.