We study the impact of stricter and more harmonized banking regulation along the income distribution using household survey data for 25 EU countries. Exploiting country-level heterogeneity in the implementation of European Banking Union directives allows us to control for confounders and identify effects. Our results show that these regulatory reforms aimed at increasing financial system resilience affect house- holds heterogeneously and result in a widening of the income distribution. We find that more stringent regulation reduces income growth for low-income households primarily due to exits from employment whereas affluent households tend to experience increased growth rates for employee and self-employed income.
We exploit an information shock related to the German Supply Chain Due Diligence Act and use detailed customs data to analyze how smaller, non-listed firms respond when expecting accountability for externalities beyond their organizational boundaries. Product-level regressions reveal a substantial reduction in imports from high ESG-risk production sectors. Adjustments occur mainly at the extensive margin, indicating that firms cut ties with high-risk suppliers. The product-level results translate into meaningful changes in overall international procurement for firms with Big Four auditors. Our findings suggest potential limits to mandates requiring firms to integrate broad sustainability considerations into operational decisions.
This paper examines the effect of CoCo bonds that qualify as additional tier 1 capital on bank stability and reporting. The results reveal a significant reduction in the distance to insolvency following the hybrid bond issuance due to increased earnings volatility. Banks report less stable net income due to more volatile loss provisions, which increases earnings opacity rather than reflects changes in asset quality. The findings are consistent with the premise that persistent uncertainty and misconceptions among investors about bail-in likelihoods limit their monitoring engagement, which results in banks becoming less transparent.
We study how individuals' views on current and future levels of income inequality change during periods of expansionary fiscal policy. In a randomized controlled trial (RCT), we provide information on fiscal expansion to a representative sample of the German population. Our findings reveal that combining a fact-based (numerical) information treatment with a narrative treatment about fiscal expansion plans reduces inequality expectations among respondents who are ex-ante dissatisfied with the government's economic policy. These effects are more pronounced among respondents without a college degree or with low political interest, highlighting the importance of narrative information for individuals who are likely to benefit most from it. We explore potential mechanisms by examining revisions in macro- and micro-level assessments of future economic conditions and find that respondents primarily update their expectations regarding economic growth and individual layoff risk.
Work in Progress
The single supervisory mechanism, loan growth vs. volatility, and granular risk spillover (with Helena Baum and Lena Tonzer).
Distributional income effects of fiscal shocks(with Göckhan Ider, Alexander Kriwoluzky, Madalina Patru, and Lena Tonzer).
Passing the keys: How public policy can shape intergenerational homeownership(with Madalina Patru and Lena Tonzer).
Fact or feelings? The role of relatable narratives in shaping inflation expectations(with Giang Nghiem and Lena Tonzer).
Fiscal policy adjustments, fairness perception, and institutional trust(with Sabrina Jeworrek and Lena Tonzer).
Individual social responsibility and risk-taking for others: Experimental evidence(with Sabrina Jeworrek and Jating Taneja).