Working Papers

Unleashing International Trade through Financial Integration: Evidence from a Cross-Border Payment System (with Gustavo S. Cortes and Vinicios P. Sant'Anna)

Leveraging administrative firm-level data on the universe of South African exporters between 2010--2019, we document that cross-border payment integration catalyzes international trade by as much as standard tariff reductions. Using the staggered implementation of a Real-Time Gross Settlement (RTGS) system across 14 Southern African Development Community countries that facilitated cross-border payments among participating countries, we document that payment integration increases bilateral trade by about 34% within member countries. This economically significant effect is comparable to a reduction of 8.3 to 12.1 percentage points in tariffs. Crucially, we find no negative spillovers to non-participant trade partners after the system's implementation. Effects on bilateral trade are only present for partners with low financial connections to South Africa through their bank branch network, destinations with domestic RTGS systems, and firms with high levels of financial dependence. Aggregate country-partner data further suggests the system leads to higher bilateral country trade volumes.

Banks' Physical Footprint, Digital Payment Technologies and Fintech Growth (with Bernardo Ricca and José Renato Ornelas) 

 Coverage: World Bank, BBC Brasil (in portuguese)

Do physical bank branches moderate the diffusion of digital payment technologies? Does the diffusion of these technologies enable fintechs to expand? To answer these questions, we leverage unexpected bank heists that use explosives and render branches temporarily inoperable.  We show that these attacks are not associated with local crime trends and that they deplete the branches’ cash inventory, disrupting their capacity to supply cash services. We show that this disruption leads to persistent increases in digital payments usage and that a smaller cash dependence boosts digital institutions’ growth not only in payment but also in credit markets.

International Lending Channel, Bank Heterogeneity and Capital Inflows (Mis)Allocation (with Silvia Marchesi)

This paper explores the role of banks' heterogeneity in international lending and its impacts on capital inflows allocation across firms by exploiting the inclusion of South Africa into the Citi Group's World Government Bond Index (WGBI). Using bank-level data, we provide evidence that banks holding sovereign bonds before the inclusion increase credit supply to non-financial firms after the shock. Moreover, less capitalized banks drive these effects. Using firm-level data in South Africa, we then show that credit is allocated to less financially constrained and less productive firms. We find no evidence of a significant improvement in real outcomes after the increase of credit supply to those firms. Our paper adds to the literature by analyzing the interplay between banks' heterogeneity, capital inflows shocks and capital misallocation. We shed some light on why the international lending channel on both firms and the economy can, in certain instances, be rather limited.

Internal Markets and M&As Value Creation: Evidence from Bank Branch-level Data (with Bernardo Ricca) 

We study the restructuring process that follows an M&A operation in an important industry -- the financial sector. We leverage rich branch-level data on labor force characteristics and financial information, including branches' income statement and balance sheet information. Consolidated conglomerates use enhanced internal labor and capital markets to reallocate resources within the organization. Labor and internal funds are reallocated to acquirer branches. Restructuring enhances profitability at both acquirer and target branches, even after accounting for market power gains. Improved lending provision and deposit collection drive profitability gains at acquirer branches, while cost cutting is the profitability driver at target branches.  Finally, in line with our hypothesis that the reallocation of internal markets drives these productivity improvements, we show that these effects are more prominent in municipalities where the conglomerate had larger local internal labor markets at the time of the consolidation. 

Government-owned Banks and Development: on Unintended Consequences of Bank Privatizations - 4th QMUL Economics and Finance Workshop Best Paper 

Coverage: World Bank

This paper examines the effects of government-owned banks on local economic performance. The paper exploits the geographical location of branches and timing variation on reform participation to estimate the effects of bank privatizations. Reform participant banks that remained under the State Governments administration did not go through any change in behavior. Privatized banks, however, displayed a large contraction in lending supply and branch operation. This contraction was more severe in less developed locations. On one hand, localities exposed to privatization experienced a large relative contraction in the economic and financial outcomes when compared to their pre-reform trend. Localities that were exposed to the reform through branches from banks that were restructured and not privatized, did not display the same behavior. The paper also provides evidence that this reduction is likely driven by higher firms’ financial constraints after the privatization and not by bloated payrolls due to political patronage before the reform. Banks that were privatized also displayed an increase in their profitability and financial strength after the reform, which suggesting positive effects of privatization on financial stability.Overall, the findings suggest that there is a trade-off between government-owned banks benefits to the real economy and its financial costs.

Words Can Hurt: How Political Communication Can Change the Pace of an Epidemic (with Jessica Gagete-Miranda and Paula Rettl) -  Working paper at CEPR Covid Economics: Vetted and real-time papers, Issue 12 (2020): 104-137 

Coverage (in Portuguese): O Globo, CNN Brazil,  Jovem Pan

While elite-cue effects on public opinion are well-documented, questions remain as to when and why voters use elite cues to inform their opinions and behaviors. Using experimental and observational data from Brazil during the COVID-19 pandemic, we study how leader cues influence decisions about issues of direct personal relevance. Relying on an event study design, we first document a divergence in mobility and excess-death trends between municipalities with low or high concentrations of Bolsonaro voters. We argue that these patterns are explained by Bolsonaro polarizing the electorate regarding COVID-19-related issues. Evidence from two pre-registered survey experiments supports this argument. We also explore whether voters react to Bolsonaro’s cues as a way to make decisions with little cognitive effort (heuristics) or to express group membership (expressive utility). Results from our survey experiments show that the effects of Bolsonaro’s cues among his supporters tend to be stronger for individuals that both strongly identify with the leader and have high cognitive resources. Findings are less clear for Bolsonaro opponents. We conclude that in-groups may follow political-elite cues to protect their social-political identity even in situations where the decision at hand has direct implications for their well-being and way of life.

Work in Progress

The Impact of  Instant Payments on Labor Outcomes: Evidence from Pix (with Giorgia Barboni, Bermardo Ricca, and Jose Renato Ornerlas)

Evaluating the take-up of digital programs: Evidence from a debt relief program in Brazil (with Daniel Grimaldi, Jessica Gagete-Miranda, Jose Renato Ornerlas and Diego Vera-Cossio)

Distributional Consequences of Sovereign Default Risk (with Andrea Camilli, Marta Giagheddu and Silvia Marchesi)

Pre-Doctoral Publications

Mariani, Lucas Argentieri, and  Laurini, Marcio Poletti. "Implicit Inflation and Risk Premiums in the Brazilian Fixed Income Market." Emerging Markets Finance and Trade 53, no. 8 (2017): 1836-1853.

Policy Papers

Nel, Jacobus, and Lucas A. Mariani. Economic impacts of FATF recommendations and grey-listing announcement. Economic Research Southern Africa Working Paper No. 05/2022.