Working papers

• Big Broad Banks: How Does Cross-Selling Affect Lending? EFA Doctoral Tutorial Best Paper Prize 2019

Abstract: Using unique micro-data that contain the internal information on all corporate customers of a large Northern European bank, I show that combining loan and non-loan products (cross-selling) has two benefits. First, it increases credit supply, especially in recessions. Second, it increases the likelihood of receiving lenient treatment in delinquency. I argue that non-loan relationships play an important role in determining credit supply and debt renegotiation, not only by (i) mitigating information asymmetries (as suggested in earlier literature), but also by (ii) increasing the profitability of the relationship. Exploiting an exogenous and differential change in certain products' profitability due to the Basel II implementation, I estimate the causal effect of this new profit channel on credit supply. A 20 percent decrease in non-loan products' profitability (1) reduces credit supply to affected firms by 10.5 percent (500,000 USD) compared with unaffected firms, and (2) reduces likelihood of receiving lenient treatment for affected firms by 58 percent (23 pp) compared with unaffected firms, conditional on being delinquent.

Conferences: AFA 2021 (scheduled), EFA 2020, European Central Bank Young Economists’ Competition 2020

• Cost of loans and moral hazard: Evidence from a quasi-experiment in Sweden (with Clara Fernström)

Abstract: We document the effects of higher borrowing cost on private firms in the presence of financial frictions by exploiting a novel quasi-experiment and a unique and comprehensive dataset from Sweden. In June 2010, the central bank of Sweden increased the repo rate unexpectedly and exposed firms with long term loan maturing right before or after the hike to different cost of borrowing. Consistent with the debt overhang theory, we find that higher cost of borrowing has a significant negative effect on investment, but more for highly levered firms. These results are robust to carefully controlling for firms' credit demand. Our findings highlight the importance of balance sheet heterogeneity in the responsiveness of firms to interest rate shocks.

Conferences: CEPR Second Annual Spring Symposium in Financial Economics (PhD poster session)

Work in progress

• Banks, working capital funding, and trade credit (with Niklas Amberg and Tor Jacobson)

• The role of government guarantee in bank lending (with Niklas Amberg and Tor Jacobson)

Publications

• Bank misconduct and online lending (with Christoph Bertsch, Isaiah Hull, and Xin Zhang) Journal of Banking and Finance, Volume 116, July 2020

Summary: Misconduct (mis-selling and hidden fees etc.) in traditional banking sector drives borrowers to online lenders.

Conferences: EFA 2018, CEPR Third European Workshop on Household Finance, 4th IWH-FIN-FIRE Workshop in Halle