Research

The Financial Distress of 2023: The role of Insured Non-Core Deposits. With A. Fuster (In Progress)
Brief Summary:
This paper examines non-core insured deposits (NCID) as a signal of bank stress—an understudied source of funding. We present preliminary evidence that, starting in 2022, banks turned to NCID to offset declines in wholesale funding. Our findings suggest that banks raising NCID hoarded cash, and that an increase in NCID strongly predicts a contraction in lending across two independent datasets. The topic is timely, as the FDIC is currently reviewing regulations on these deposits.

From Fines to Credit Lines: Regulatory Uncertainty and Bank Lending. With Y. Sun (Submitted)
Brief Summary:
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.

Financial Regulatory Cycles: A Political Economy Model. With P. Almasi and C. Prato (Submitted)
Brief Summary:
This paper provides a political economy explanation for the regulatory cycles I had previously documented in an economic history paper (see CV). We show that while changing sentiment (see figure) creates pro-cyclicality in regulation, the standard frictions in electoral models used for example to explain budget cycles create, in our regulatory context, an ex ante inefficient amplification of the pro-cyclicality.

Optimal Lockdowns Under Constraints with C. Parkinson (University of Arizona).
Economic Inquiry (Forthcoming, 2025).

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.