Stakeholders’ Aversion to Inequality and Bank Lending to Minorities
Co-author: Hanh Le, November 2023
AFA 2025 · 2024 UNC Solutions for Reducing Wealth Inequality · MoFiR 2023
Paper · BibTeX · Liberty Street

Abstract: We find that banks differ in their propensity to lend to minorities based on their stakeholders’ aversion to inequality. Using mortgage application data collected under the Home Mortgage Disclosure Act, we document a large and persistent cross-sectional variation in banks’ propensity to lend to minorities. Inequality-averse banks have a higher propensity to lend to borrowers in high-minority areas and, within census tracts, to non-white borrowers compared to other banks. This higher propensity (i) is not explained by selection of applicants, (ii) allows these banks to retain and attract their inequality-averse stakeholders, and (iii) does not predict worse ex-post loan performance.

Geopolitical Risk and Decoupling: Evidence from U.S. Export Controls
Co-authors: Lina Han, Marco Macchiavelli, André Silva, June 2024
CEPR & Kiel Institute Geonomics Conference 2023 · 2024 Bocconi Geonomics Workshop · 2024 GCAP Annual Conference (Columbia)
Paper · Liberty Street Blog · Bloomberg · Barron’s · Marginal Revolution · BibTeX

Abstract: Amid the current U.S.-China technological race, the U.S. has imposed export controls to deny China access to strategic technologies. We document that these measures prompted a broad-based decoupling of U.S. and Chinese supply chains. Once their Chinese customers are subject to export controls, U.S. suppliers are more likely to terminate relations with Chinese customers, including those not targeted by export controls. However, we find no evidence of reshoring or friend-shoring. Due to these disruptions, affected U.S. suppliers experience negative abnormal stock returns, wiping out $130 billion in market capitalization, and a drop in bank lending, profitability, and employment.

How do supply shocks to inflation generalize? Evidence from the pandemic era in Europe
Co-authors: Viral Acharya, Tim Eisert, Christian Eufinger, November 2023
EFA 2024 · WFA 2024 · 2024 Yale Supply Chain Workshop · 2023 CEPR Paris Symposium
Paper · BibTeX · FT · VoxEU

Abstract: We document how the interaction of supply-chain pressures, heightened household inflation expectations, and firm pricing power contributed to the pandemic-era surge in consumer price inflation in the euro area. Initially, supply-chain pressures increased inflation through a cost-push channel and raised inflation expectations. Subsequently, the cost-push channel intensified as firms with high pricing power increased product markups in sectors witnessing high demand. Eventually, even though supply-chain pressures eased, these firms were able to further increase markups due to the stickiness of inflation expectations. The resulting persistent impact on inflation suggests supply-side impulses can generalize into broad-based inflation via an interaction of household expectations and firm pricing power.

Understanding the Pricing of Carbon Emissions: New Evidence from the Stock Market
Co-authors: Emilio Osambela, Matthew Pritsker, June 2024
2024 NBER SI EFEL
Paper · BibTeX

Abstract: Are carbon emissions priced in equity markets? The literature is split, but most research finds carbon emissions intensity, a measure targeted by ESG investors, is not priced. We show that: (i) most existing empirical tests suffer from measurement error and omitted variable bias, and (ii) if emissions intensity is priced, stock returns depend on expected emissions intensity and the product of the innovation in emissions intensity and the price-dividend ratio. Based on these new predictions, our empirical results confirm emissions intensity is priced, but the magnitude is largely driven by a few industries characterized by the presence of “super emitters.”