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Recent Working papers

Banking

• On the scope of bank activities: Expansion of bank powers into underwriting
• Bank-firm and Bank-Depositor Relationships
• On the loan sale market and loan contracting
• On Financial Crisis and Bank Runs

Venture Capital, Entrepreneurship, Household Finance

Behavioral Finance

IPOs, Credit Ratings, Misc finance

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Recent Papers

• "On the rise of FinTechs - Credit Scoring using Digital Footprints," with Tobias Berg, Valentin Burg, and Ana Vanjak.
• "Deposit Inflows and Outflows in Failing Banks: The Role of Deposit Insurance," with Chris Martin and Alex Ufier.
• "Loan Officer Incentives, Internal Ratings, and Default Rates," with Tobias Berg and Jorg Rocholl.

  "Loan Officer Incentives, Internal Ratings, and Default Rates," with Tobias Berg and Jorg Rocholl.
  
  Abstract:
  In this paper, we analyze the effect of loan officer incentives on bank-internal ratings. Internal ratings are regularly used by banks and regulators for loan making, risk assessment, and capital adequacy ratios (as per Basel II/III). However, how internal ratings are impacted by loan officer incentives is widely unknown. Using unique lending data, we find that loan officer incentives skew internal ratings even in settings where the internal ratings are computed by a credit scoring model with hard information based inputs. We find loan officers make multiple attempts to get loans over the cutoff by re-inputting information using additional trials. These results hold when cut-offs change and also in a regression-discontinuity design. We further find that additional trials result in higher default rates. Our results suggest strategic manipulation of information and of internal ratings stemming from loan officer incentives and suggest it is important for banks and regulators to take such effects into account when using internal ratings for risk assessment and regulation.

  
  
  

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Banking

On the scope of bank activities: Expansion of bank powers into underwriting

• "The long-term default performance of bank underwritten security issues", Journal of Banking and Finance, 1994, 18(2), 397-418.
• "Commercial banks in investment banking: Conflict of interest or certification role?", Journal of Financial Economics, 1996, 40(3), 373-401.
• "Bank underwriting of debt securities: Modern evidence", with Amar Gande, Anthony Saunders, and Ingo Walter, Review of Financial Studies, 1997, 10(4), 1175-1202.
• "Bank entry, competition and the market for corporate securities underwriting", with Amar Gande and Anthony Saunders, Journal of Financial Economics, 1999, 54(2), 165-195.
• "Commercial banks as underwriters: Implications for the going public process", Journal of Financial Economics, 1999, 54(2), 133-163.
• "On the benefits of concurrent lending and underwriting", with Steve Drucker, Journal of Finance, 2005, 60(6), 2763-2800.
• "Banks in Capital Markets", with Steve Drucker, chapter in Handbook of Empirical Corporate Finance, ed. by E. Eckbo, Handbooks in Finance, North-Holland Publishers, 2007, 189-232.

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Bank-firm and Bank-Depositor Relationships

• "Building relationships early: Banks in venture capital", with Thomas Hellmann and Laura Lindsey, Review of Financial Studies, 2008, 21(2), 513-541.
• "On the importance of retail banking relationships", with Jorg Rocholl, Journal of Financial Economics, 2008, 89(2), 253-267.
• "Global retail lending in the aftermath of the U.S. financial crisis: Distinguishing between supply and demand effects", with Jorg Rocholl and Sascha Steffen, Journal of Financial Economics, 2011, 100(3), 556-578.
• "Understanding Bank Runs: The Importance of Depositor-Bank Relationships and Networks", with Rajkamal Iyer, American Economic Review, 2012, 102(4), 1414-45.

Map of depositors who ran can be seen on Google Earth using this link. The round dots represent depositors who run; the big star is the bank.

• "Does Financing Spur Small Business Productivity? Evidence from a Natural Experiment", with Karthik Krishnan and Debarshi Nandy, Review of Financial Studies, 2015, 28(6), 1768-1809.
• "A Tale of Two Runs: Depositor Responses to Bank Solvency Risk", with Rajkamal Iyer and Nick Ryan, Journal of Finance, 2016, 71(6), 2687-2726.
• "What Do A Million Observations Have to Say About Loan Defaults? Opening the Black Box of Relationships," with Jorg Rocholl and Sascha Steffen, Journal of Financial Intermediation, 2017,31,1-15.
• "Loan Officer Incentives, Internal Ratings, and Default Rates", with Tobias Berg and Jorg Rocholl.

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On the loan sale market and loan contracting

• "Bank borrowers and loan sales: New evidence on the uniqueness of bank loans", with Sandeep Dahiya and Anthony Saunders, Journal of Business, 2003, 76(4), 563-582.
• "On loan sales, loan contracting and lending relationships", with Steve Drucker, Review of Financial Studies, 2009, 22(7), 2835-2872.
• "Adverse Incentives in Crowdfunding", with Thomas Hildebrand and Jorg Rocholl, Management Science, 2017, 63(3), 587-608.

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On Financial Crisis and Bank Runs

• "Global retail lending in the aftermath of the U.S. financial crisis: Distinguishing between supply and demand effects", with Jorg Rocholl and Sascha Steffen, Journal of Financial Economics, 2011, 100(3), 556-578.
• "Understanding Bank Runs: The Importance of Depositor-Bank Relationships and Networks", with Rajkamal Iyer, American Economic Review, 2012, 102(4), 1414-45.

Map of depositors who ran can be seen on Google Earth using this link. The round dots represent depositors who run; the big star is the bank.

• "A Tale of Two Runs: Depositor Responses to Bank Solvency Risk", with Rajkamal Iyer and Nick Ryan, Journal of Finance, 2016, 71(6), 2687-2726.
• "Adverse Incentives in Crowdfunding", with Thomas Hildebrand and Jorg Rocholl, Management Science, 2017, 63(3), 587-608.

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Venture Capital, Entrepreneurship, Household Finance

• "The interaction between product market and financing strategy: The role of venture capital", with Thomas Hellmann, Review of Financial Studies, 2000, 13(4), 959-984.
• "On the fundamental role of venture capital", with Thomas Hellmann, Economic Review of the Atlanta Federal Reserve Bank, 2002, Vol. 87, No. 4.
• "Venture capital and the professionalization of start-up firms: Empirical Evidence", with Thomas Hellmann, Journal of Finance, 2002, 57 (1), 169-197.
• "Optimism and economic choice", with David Robinson, Journal of Financial Economics, 2007, 86, 71-99.
• "Building relationships early: Banks in venture capital", with Thomas Hellmann and Laura Lindsey, Review of Financial Studies, 2008, 21(2), 513-541.
• "On the lifecycle dynamics of venture-capital and non-venture-capital-financed firms", with Rebecca Zarutskie, Journal of Finance, 2012, 67(6), 2247-93.
• "A survey of venture capital research", with Marco Da Rin and Thomas Hellmann, chapter in Handbook of the Economics of Finance, ed. by George M. Constantinides, Milton Harris and Rene M. Stulz, Elsevier, 2013, Volume 2, Part A, 573-648.
• "The economic psychology of entrepreneurship and family business", with David Robinson, Journal of Economics and Management Strategy, 2013, 22(2), 423-44.
• "Does Financing Spur Small Business Productivity? Evidence from a Natural Experiment", with Karthik Krishnan and Debarshi Nandy, Review of Financial Studies, 2015, 28(6), 1768-1809.
• "Adverse Incentives in Crowdfunding", with Thomas Hildebrand and Jorg Rocholl, Management Science, 2017, 63(3), 587-608.

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Behavioral Finance

• "Optimism and economic choice", with David Robinson, Journal of Financial Economics, 2007, 86, 71-99.
• "The economic psychology of entrepreneurship and family business", with David Robinson, Journal of Economics and Management Strategy, 2013, 22(2), 423-44.
• "Managerial attitudes and corporate actions", with John Graham and Cam Harvey, Journal of Financial Economics, 2013, 109(1), 103-21.
• "A Corporate Beauty Contest", with John Graham and Cam Harvey, Management Science, 2017, 63,3044-3058.

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IPOs, Credit Ratings, Misc finance

• "Institutional allocation in initial public offerings: Empirical evidence", with R. Aggarwal and N.R. Prabhala, Journal of Finance, 2002, 57(3), 1421-1442.
• "Credit ratings, collateral and loan characteristics: Implications for yield", with Kose John and Anthony Lynch, Journal of Business, 2003, 76(3), 371-409.
• "Debtor-in-possession financing and bankruptcy resolution: Empirical evidence", with Dahiya, John and Ramirez, Journal of Financial Economics, 2003, 69(1), 259-280.
• "Enhancing security value by ownership restrictions: Evidence from a natural experiment", with Amar Gande, Financial Management, 2005, 34(4), 35-64.
• "Capital Allocation and Delegation of Decision-Making Authority within Firms", with John Graham and Cam Harvey, Journal of Financial Economics, 2015, 115(3), 449-470.

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