Research
Working Papers
Job Market Paper
Abstract: I show that price regulation and increased oversight can unintentionally reduce credit access by driving out lenders with advanced screening technologies, disproportionately affecting borrowers with lower credit scores and limited credit histories. I focus on the sudden enforcement of state-level interest rate limits and oversight measures in the U.S. nonbank personal loan market. While prior research often assumes a fixed market structure, I find that these regulations lead to the exit of lenders with advanced screening abilities. Remaining lenders rely on traditional credit scores and possess less information about borrower default risk, raising prices and reducing credit availability for subprime borrowers and those without credit scores. These changes negatively affect loan performance, borrower outcomes, and financial inclusion. I develop a structural lending model to isolate the effects of shifting lender composition and changes in market power from interest rate caps, examining their impact on prices, loan quantities, and profits. The model, which incorporates borrower heterogeneity, lender screening technologies, and adverse selection, shows that interest rate caps and increased oversight disproportionately harm low-default-risk borrowers who appear risky based on traditional scoring. Counterfactual simulations suggest that raising the rate cap from 21% to 28% and cutting fixed regulatory costs by 45% could improve credit access for subprime borrowers.
Publications
Government and Private Household Debt Relief during COVID-19
Shadow Bank Distress and Household Debt Relief: Evidence from the CARES Act
with Erica Jiang, Gregor Matvos, Tomasz Piskorski and Amit Seru (01/2022) [Link to Publication]
AEA Papers and Proceedings, 2022
Press: Insights by Stanford Business [Link]
Works-in-Progress
Protect Consumers or Banks: Why Do States Regulate Nonbanks?
with Winston Xu
Draft coming soon
What drives state regulation of nonbanks? We examine the factors influencing state-level regulation of nonbank financial institutions. As nonbanks—particularly fintech lenders—capture a growing share of the consumer credit market, states have responded with diverse regulatory approaches. To analyze these responses, we construct one of the first comprehensive databases of enforcement actions against nonbanks across 47 states over 20 years. Leveraging this dataset, we find no evidence that state regulations are primarily motivated by consumer protection or aiding subprime borrowers. Instead, we find preliminary evidence suggesting that state regulators may target nonbanks to “protect” state-chartered banks from competition. To explore this further, we investigate the “demand” side, where state-chartered banks lobby, file complaints, or make political donations to reduce competitive pressure, and the “supply” side, where state regulators respond due to incentives like job prospects or financial repression. Regulators may also aim to maintain financial stability, concerned that excessive competition could lead state-chartered banks to take on riskier behaviors.
Mobility Patterns around COVID-19: Debt Relief, Regional Inequality, and Labor Reallocation
with Gregor Matvos, Tomasz Piskorski and Amit Seru
Draft coming soon
We examine U.S. borrower mobility patterns during and after the COVID-19 pandemic and their implications for regional inequality and labor reallocation. Using a representative panel, we find that young, high-credit-score borrowers were more likely to move during the pandemic, often relocating to less densely populated and more affordable areas. Our findings suggest that post-COVID mobility patterns are increasingly driven by affordability (e.g., lower housing prices) rather than traditional economic opportunities (e.g., higher regional income levels). This shift is likely influenced by the rise of remote work, which enables individuals to live farther from job centers. Debt relief policies, particularly forbearance, also significantly increased the likelihood of moving. However, borrowers moving due to forbearance were more likely to make temporary moves and less likely to purchase homes in their new locations. These findings highlight how pandemic-induced changes in work flexibility and debt relief policies have reshaped geographic mobility, with broader implications for regional inequality and labor reallocation.
The Effects of Credit Access on Higher Education Choices and Long-Term Economic Outcomes
Draft coming soon
I study how the supply of subsidized student loans affects students' higher education choices. In the U.S., key life decisions like college attendance and major selection are often financed through federal student loans. While these loans can relax credit constraints and help students attend preferred institutions and choose relevant majors, they may also reduce price sensitivity, potentially leading to “overinvestment” in high-tuition institutions with limited returns. My project examines how financial constraints impact these choices, leveraging a 2011 policy change that tightened Parent PLUS loan standards, resulting in 400,000 additional denials. Parent PLUS loans, held by parents rather than students, allow me to isolate credit access effects on educational decisions without directly increasing students' debt burdens. This research explores how changes in credit availability influence human capital investment, especially for low-income and subprime borrowers who face greater credit constraints. Preliminary findings suggest that restricted credit supply leads high-achieving, low-income students to enroll in less expensive, lower-ranked institutions but pushes them toward high-return majors, such as science and engineering, within those institutions.