Working Papers

1. Bankruptcy Lawyers and Credit Recovery

Job Market Paper

[SSRN] [Federal Reserve Bank of Philadelphia Working Paper No. 24-10]
Awards: BlackRock Applied Research Award Finalist The W. Edwards Deming Center Doctoral Fellowship
Presented at: Columbia Business School PhD Seminar • Columbia Financial Economics Colloquium • Inter-Finance PhD Seminar • CU Boulder Summer Conference on Consumer Financial Decision Making (poster) • 2022 FMA • WashU Economics Graduate Student Conference • Office of Financial Research PhD Symposium • 2023 MFA • Young Scholars Finance Consortium • Columbia Business School • 2023 European Finance Association Doctoral Tutorial • WashU Finance Conference (poster) • CEPR European Workshop on Household Finance • 2024 SFS Cavalcade • 2024 WFA

Abstract: I study how bankruptcy law firm advertisements affect credit recovery of households in financial distress. Exploiting the border discontinuity strategy associated with the geographic unit in which local TV advertisements are sold, I empirically uncover bankruptcy filings and credit recovery related to exogenous variations in bankruptcy law firm advertisements. I first document a significant advertising effect on filing rates and show that advertising-induced filers are similar to existing filers. I then find a positive effect of advertisements on credit outcomes including credit score, new homeownership, and foreclosure. I interpret these findings as evidence that lawyers address information frictions in households’ assessment of the bankruptcy option.

2. Cross-subsidization of Bad Credit in a Lending Crisis
with Nikolaos Artavanis, Stavros Panageas, and Margarita Tsoutsoura

Accepted, Review of Financial Studies

[SSRN]  [NBER Working Paper]
Presented at: ECB • Goethe University Frankfurt • CEPR Endless Summer Conference of Financial Intermediation and Corporate Finance 2021 FMA 2022 AEA 2022 AFA • RCEA Conference on Recent Developments in Economics, Econometrics and Finance • 2022 Eastern Finance Association • 2022 European Finance Association • 2023 WFA
Media coverage: UCLA Anderson Review

Abstract: We study the corporate-loan pricing decisions of a major Greek bank during the Greek Financial Crisis. A unique aspect of our dataset is that we  observe both the interest rate  and the "breakeven rate" of each loan, as computed by the bank's own loan-pricing department (in effect, the loan's marginal cost). We document that low-breakeven-rate (safer) borrowers are charged significant markups, whereas high-breakeven-rate (riskier) borrowers are charged small and sometimes even negative markups. We rationalize this de facto cross-subsidization of riskier borrowers by safer borrowers through the lens of a dynamic model featuring depressed collateral values, impaired capital-market access, and limit pricing.

3. Who Provides Credit in Times of Crisis? Evidence from the Auto Loan Market
with José J. Canals-Cerdá

Revise & Resubmit, Quarterly Journal of Finance

[SSRN] [Federal Reserve Bank of Philadelphia Working Paper No. 21-28]
Presented at: 4th Biennial Conference on Auto Lending (Philadelphia Fed) RCEA Money, Macro and Finance Conference Credit Scoring and Credit Control Conference XVII (University of Edinburgh) International Risk Management Conference

Abstract: We examine the contribution of different lending channels to the auto loan market in times of crisis. Specifically, we explore auto lending from traditional banks, credit unions, and finance companies (nonbanks) over the past two decades with special emphasis on the Great Recession and the COVID-19 pandemic. We find that banks provided weak support during the pandemic, thus losing market share and continuing a trend that emerged following the Great Recession. Nonbank market share during this period grew most significantly for subprime borrowers and in counties with stronger bank dependence. These findings contrast with the experience during the Great Recession, when banks contributed the most resilient credit to the auto loan market. Our paper highlights nonbanks' critical role in the auto loan market in times of crisis, particularly for the subprime segment.