Monetary Tightening and U.S. Bank Fragility in 2023: Mark-to-Market Losses and Uninsured Depositor Runs?

SSRN Electronic Journal · 2023 · 93 citations

• Economics
• Monetary economics
• Business

Beyond the Balance Sheet Model of Banking: Implications for Bank Regulation and Monetary Policy

Journal of Political Economy · 2023 · 82 citations

• Economics
• Monetary economics
• Financial system

We empirically document two adjustment margins that are usually absent from the predominant “bank balance sheet lending” view of financial intermediation. For the shadow bank substitution margin, shadow banks substitute for traditional banks among loans that are easily sold. For the balance sheet retention margin, banks switch between balance sheet lending and selling loans based on their balance sheet strength. Estimates from a structural model show that these margins significantly shape policy responses, dampening the effect of capital requirements on lending whose costs are borne by wealthier borrowers. Secondary-market disruptions such as quantitative easing have significantly larger impacts on lending than capital requirements.

When Harry Fired Sally: The Double Standard in Punishing Misconduct

Journal of Political Economy · 2022 · 195 citations

• Political Science
• Criminology
• Psychology

We examine gender differences in misconduct punishment in the financial advisory industry. There is a “gender punishment gap”: following an incident of misconduct, female advisers are 20% more likely to lose their jobs and 30% less likely to find new jobs, relative to male advisers. The gender punishment gap is not driven by gender differences in occupation, productivity, nature of misconduct, or recidivism. The gap in hiring and firing dissipates at firms with a greater percentage of female managers and executives. We also explore the differential treatment of ethnic minority men and find similar patterns of “in-group” tolerance.

Mortgage Refinancing, Consumer Spending, and Competition: Evidence from the Home Affordable Refinance Program

The Review of Economic Studies · 2022 · 80 citations

• Economics
• Monetary economics
• Business

Abstract We examine the ability of the government to impact mortgage refinancing activity and spur consumption by focusing on the Home Affordable Refinance Program (HARP) that relaxed housing equity constraints by extending government credit guarantee on insufficiently collateralized refinanced mortgages. Difference-in-difference tests based on program eligibility criteria reveal a significant increase in refinancing activity by HARP. More than three million eligible borrowers with primarily fixed-rate mortgages refinanced under HARP, receiving an average reduction of 1.45$\%$ in interest rate ($3,000 in annual savings). Durable spending by borrowers increased significantly after refinancing. Regions more exposed to the program saw a relative increase in non-durable and durable consumer spending, a decline in foreclosure rates, and faster recovery in house prices. Competitive frictions in the refinancing market hampered the program’s impact: the take-up rate and annual savings among those who refinanced were reduced by 10–20$\%$, with amplified effects for the most indebted borrowers.

Financing Labor

Review of Finance · 2021 · 148 citations

• Finance
• Business
• Economics

Abstract Financial market imperfections can have significant impact on employment decisions of firms. We illustrate the economic importance of this channel by showing that employment decisions are constrained by firms’ financial health and liquidity. Our main analysis uses a collage of three “quasi-experiments” to trace the effects of finance on employment. The results suggest that financial constraints and the availability of credit play an important role in firm-level employment decisions, as well as aggregate unemployment outcomes.

Measuring Technological Innovation over the Long Run

American Economic Review Insights · 2021 · 334 citations

• Computer Science
• Economics
• Industrial organization

We use textual analysis of high-dimensional data from patent documents to create new indicators of technological innovation. We identify important patents based on textual similarity of a given patent to previous and subsequent work: these patents are distinct from previous work but related to subsequent innovations. Our importance indicators correlate with existing measures of patent quality but also provide complementary information. We identify breakthrough innovations as the most important patents—those in the right tail of our measure—and construct time series indices of technological change at the aggregate and sectoral levels. Our technology indices capture the evolution of technological waves over a long time span (1840 to the present) and cover innovation by private and public firms as well as nonprofit organizations and the US government. Advances in electricity and transportation drive the index in the 1880s, chemicals and electricity in the 1920s and 1930s, and computers and communication in the post-1980s. (JEL C43, N71, N72, O31, O33, O34)

Banking Without Deposits: Evidence from Shadow Bank Call Reports

SSRN Electronic Journal · 2020 · 68 citations

• Business
• Financial system
• Psychology