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.
MiFID II and analyst recommendations: Does the unbundling of research fees from sales commissions reduce tipping?(single author) - under revision, earlier draft avaiable upon request.
This paper evaluates if MiFID II reduced the early information disclosure on analyst recommendation changes to selected investors - so-called tipping. Based on 2,712 recommendation changes published by European banks and brokers from 04’2016- 09’2019, I find absolute returns and turnover rise significantly on the day preceding the release of an up-/downgrade before and after MiFID II became law. The analysis also reveals that stock prices move further in the revision direction on publication day. That suggests that selected investors continue to profit from an informational advantage likely harmful to the financial market overall, notwithstanding the regulatory change.
Work in Progress
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).
The single supervisory mechanism, market structure and granular banking risk (with Helena Baum and Lena Tonzer).
Fact or feelings? Relatable narratives to anchor inflation expectations(with Giang Nghiem and Lena Tonzer).
Fiscal policy adjustments, fairness perception, and institutional trus(with Sabrina Jeworrek and Lena Tonzer).