Research

Job Market Paper

Abstract: I show that price regulation and increased oversight can unintentionally reduce credit access and raise prices by driving out lenders with advanced risk-screening models. These lenders concentrate in less-creditworthy market segments, where their superior information helps overcome adverse selection. This makes them both the best positioned to serve borrowers with lower credit scores and the most impacted by regulatory intervention. To show this, I study the sudden enforcement of rate caps and oversight in the U.S. nonbank personal loan market. Using a difference-in-differences design around state regulation, I show that rate caps reduce credit by 10%, increase prices by 8%, and result in 21% of lenders exiting the market. I develop a structural model that separates the effects of interest rate caps from the fixed costs of regulatory oversight. The model, incorporating borrower heterogeneity, screening technologies, and adverse selection, shows that these regulations hurt low-risk borrowers who appear risky on paper. Counterfactuals suggest that raising the cap from 21% to 28% and cutting fixed regulatory costs by 45% could improve credit access for subprime borrowers.

with Erica Jiang, Gregor Matvos, Tomasz Piskorski and Amit Seru [SSRN][NBER][Link to Publication]

Brookings Papers on Economic Activity, 2022 

• • Press: NBER Digest  [Link], USC Marshall Feature Article [Link], Fortune [Link], Money Magazine [Link], Brookings [Link]

with Erica Jiang, Gregor Matvos, Tomasz Piskorski and Amit Seru (01/2022) [Link to Publication]

AEA Papers and Proceedings, 2022

• • Press: Insights by Stanford Business [Link]

with Zunda Winston Xu

Draft coming soon

What drives state regulation of nonbanks? We examine the factors influencing state-level regulation of nonbank financial institutions. As nonbanks—particularly fintech lenders—capture a growing share of the consumer credit market, states have responded with diverse regulatory approaches. To analyze these responses, we construct one of the first comprehensive databases of enforcement actions against nonbanks across 47 states over 20 years. Leveraging this dataset, we find no evidence that state regulations are primarily motivated by consumer protection or aiding subprime borrowers. Instead, we find preliminary evidence suggesting that state regulators may target nonbanks to “protect” state-chartered banks from competition. To explore this further, we investigate the “demand” side, where state-chartered banks lobby, file complaints, or make political donations to reduce competitive pressure, and the “supply” side, where state regulators respond due to incentives like job prospects or financial repression. Regulators may also aim to maintain financial stability, concerned that excessive competition could lead state-chartered banks to take on riskier behaviors.

with Gregor Matvos, Tomasz Piskorski and Amit Seru 

Draft coming soon

We examine U.S. borrower mobility patterns during and after the COVID-19 pandemic and their implications for regional inequality and labor reallocation. Using a representative panel, we find that young, high-credit-score borrowers were more likely to move during the pandemic, often relocating to less densely populated and more affordable areas. Our findings suggest that post-COVID mobility patterns are increasingly driven by affordability (e.g., lower housing prices) rather than traditional economic opportunities (e.g., higher regional income levels). This shift is likely influenced by the rise of remote work, which enables individuals to live farther from job centers. Debt relief policies, particularly forbearance, also significantly increased the likelihood of moving. However, borrowers moving due to forbearance were more likely to make temporary moves and less likely to purchase homes in their new locations. These findings highlight how pandemic-induced changes in work flexibility and debt relief policies have reshaped geographic mobility, with broader implications for regional inequality and labor reallocation.

Draft coming soon

I study how the supply of subsidized student loans affects students' higher education choices. In the U.S., key life decisions like college attendance and major selection are often financed through federal student loans. While these loans can relax credit constraints and help students attend preferred institutions and choose relevant majors, they may also reduce price sensitivity, potentially leading to “overinvestment” in high-tuition institutions with limited returns. My project examines how financial constraints impact these choices, leveraging a 2011 policy change that tightened Parent PLUS loan standards, resulting in 400,000 additional denials. Parent PLUS loans, held by parents rather than students, allow me to isolate credit access effects on educational decisions without directly increasing students' debt burdens. This research explores how changes in credit availability influence human capital investment, especially for low-income and subprime borrowers who face greater credit constraints. Preliminary findings suggest that restricted credit supply leads high-achieving, low-income students to enroll in less expensive, lower-ranked institutions but pushes them toward high-return majors, such as science and engineering, within those institutions.