Publications
Publications
1. Cross-subsidization of Bad Credit in a Lending Crisis
with Nikolaos Artavanis, Stavros Panageas, and Margarita Tsoutsoura
Review of Financial Studies, 38(5), pp. 1464-1501, 2025
[Published version][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 EFA • 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.
2. Who Provides Credit in Times of Crisis? Evidence from the Auto Loan Market
with José J. Canals-Cerdá
Quarterly Journal of Finance, 14(4), 2024
[Published version][SSRN] [Federal Reserve Bank of Philadelphia Working Paper No. 25-06]
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 lending from traditional banks, credit unions, and finance companies (nonbanks) over the past two decades, with an 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 the 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. Survey evidence suggests that a tightening in banks' lending standards may have contributed to this trend. 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' increasing role in the auto loan market in times of crisis, particularly for the subprime segment.
Working Papers
1. Bankruptcy Lawyers and Credit Recovery
[SSRN] [Federal Reserve Bank of Philadelphia Working Paper No. 24-10]
Awards: BlackRock Applied Research Award Finalist • WFA Brattle Group PhD Candidate Award for Outstanding Research • The W. Edwards Deming Center Doctoral Fellowship
Presented at: CU Boulder CFDM (poster) • 2022 FMA • WashU EGSC • OFR PhD Symposium • 2023 MFA • Young Scholars Finance Consortium • Columbia Business School • 2023 EFA • WashU Finance Conference (poster) • CEPR European Workshop on Household Finance • 2024 SFS Cavalcade • 2024 WFA
Abstract: I study how bankruptcy law firm advertisements affect household credit, exploiting the borders of local TV advertisement media markets. I document a significant advertising effect on filing rates, and subsequently show that ad exposure is associated with better post-bankruptcy credit outcomes. I then characterize how ad-induced filers are different from existing filers in terms of case, financial, and credit variables. I find that ad-induced filers are more likely to receive a discharge, file with lawyer representation, and be first-time filers. I interpret these findings as evidence that bankruptcy law firm advertisements help mitigate under-information and stigma in bankruptcy.
2. When Banks Fail: Depositor Attention and the Cost of Funding for Survivors
with Stefan Walz
[Draft coming soon]
Presented at: Behavioural Finance Working Group Conference
Abstract: We document a novel channel through which bank failures affect the economy by increasing the funding costs of surviving banks. Using a sample of U.S. bank failures, we find that competitor banks significantly raise deposit rates following a nearby bank failure, even when controlling for local economic conditions and bank fundamentals. The effect is persistent, lasting up to three years, and is stronger following highly publicized failures. At the same time, we observe weaker deposit and loan growth at surviving banks after failures. Consistent with an increase in depositor price sensitivity, we observe price effects for uninsured and insured deposits. Our findings highlight how banking crises propagate indirectly by making funding more expensive, even if remaining banks are safe, thereby constraining credit supply and amplifying economic downturns.
3. Asking or Suing to Pay the Bills: Crowdfunding and Personal Injury Lawsuits
with Kyle Coombs
[Draft coming soon]
Presented at: Bates College • Maine Economics Conference
Abstract: After an injury from an accident, individuals have three primary ways of deferring their expenses to others: default, lawsuits, and crowdfunding. This paper examines the relationship between the latter two of these options, by evaluating the impact of personal injury law firm advertisements on crowdfunding by households in financial distress. Using a border discontinuity strategy based on the geographic unit in which local TV ads are sold, we document a significant effect of advertising on the number of campaigns, average donation counts, and average amount raised. This effect is more pronounced in low-income areas, which we interpret as crowdfunding providing vital liquidity for prolonging the case for a higher settlement.