Research

From Fines to Credit Lines: Regulatory Uncertainty and Bank Lending.   With Yangfan Sun
Abstract:
We study the impact of unprecedented U.S. government lawsuits against lenders in one of the two main mortgage market segments. We find that affected banks retreated significantly from the affected segment and simultaneously increased their credit supply to independent mortgage companies (IMCs) that expanded most in that segment. To a lesser degree, unaffected lenders also reduced their presence in the affected segment. Ultimately, the lawsuits hindered credit access by lower income households. Our study is the first to highlight banks' active role in the migration of lending to the shadow banking sector in response to regulatory uncertainty.

Beyond Hot Money: The Role of Non-Core Insured Deposits in Bank Funding. (Preliminary)   With Andreas Fuster
Abstract:
Postcrisis work on bank funding emphasizes stability risks from wholesale (uninsured) liabilities, contrasting them with stable core deposits. Many U.S. banks also rely on non-core insured funding—especially brokered deposits (BD)—which supervisors and analysts often associate with risk-taking and run-proneness. We test the latter. In sharp contrast to the “hot-money” view, BD funding remains available and scales in systemwide stress episodes, including the 2008–09 crisis and the 2023 banking turmoil, and serves as a source of liquidity for vulnerable banks facing uninsured outflows. Yet banks with higher BD shares appear more fragile on outcomes—sharper wholesale outflows and weaker equity performance in shocks. We reconcile these facts by showing that the adverse outcomes are concentrated among institutions that increased BD reliance on the eve of the turmoil. The evidence is consistent with self-selection and signaling effects. While our findings alleviate run-fragility concerns, the non-selective access to BD during stress (weak market discipline) reinforces concerns about risk-taking incentives and potential “gambling for resurrection.”

Non-Banks in the Mortgage Market and Systemic Risk. With A. Fuster (In Progress)

Financial Regulatory Cycles: A Political Economy Model with P. Almasi and C. Prato.
Journal of Financial Intermediation, 2025.

Optimal Lockdowns Under Constraints with C. Parkinson (University of Arizona).
Economic Inquiry, 2024.

Bank Capital: A Seawall Approach with Dell'Ariccia, G., L. Laeven, L. Ratnovski, H. Tong.
International Journal of Central Banking, 2020.

Housing finance and real-estate booms: a cross-country perspective with Cerutti, E. and Dell'Ariccia, G.
Journal of Housing Economics, 2017.

Regulation and the Mortgage Crisis. with Ning Fu.
Economic Journal 2017.

Borrower Protection and the Supply of Credit: Evidence from Foreclosure Laws. with Yangfan Sun.
Journal of Financial Economics 2016.

Bank Liability Structure and Mortgage Lending. with Kazim Kazimov.
Journal of Financial Economics 2015.

Growth opportunities, Strategic Savings, and the Dot Com Bubble. with N. Arnold.
Economic Inquiry 2015.

Sudden Stops, Output Drops and Credit Collapses.
Macroeconomic Dynamics 2013.