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Research by Topics

Links to published papers are from the Journals' designated sites.  Note you should obtain permission to access these sites.

Recent Working papers

Banking

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

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Bank-firm and Bank-Depositor Relationships

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On the loan sale market and loan contracting

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On Financial Crisis and Bank Runs

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Venture Capital, Entrepreneurship, Household Finance

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Behavioral Finance

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IPOs, Credit Ratings, Misc finance

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