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Working Paper
Less Bank Regulation, More Non-Bank Lending
Bank deregulation in the form of the repeal of the Glass-Steagall Act facilitated the entry of non-bank lenders into the market for syndicated loans during the pre-2008 credit boom. Institutional investors disproportionately purchase tranches of loans originated by universal banks able to cross-sell loans and underwriting services to firms (as permitted by the repeal). A shock to cross-selling intensity increases loan liquidity at origination and over time. The mechanism is that non-loan exposures ensure monitoring even when banks retain small loan shares. Our findings complement the ...
Working Paper
The other (commercial) real estate boom and bust: the effects of risk premia and regulatory capital arbitrage
The last decade?s boom and bust in U.S. commercial real estate (CRE) prices was at least as large as that in the housing market and also had a large effect on bank failures. Nevertheless, the role of CRE in the Great Recession has received little attention. This study estimates cohesive models of short-run and long-run movements in capitalization rates (rent-to-price-ratio) and risk premiums across the four major types of commercial properties. Results indicate that CRE price movements were mainly driven by sharp declines in required risk premia during the boom years, followed by sharp ...
Working Paper
Self-reinforcing Glass Ceilings
After the gender pay gap narrows, what labor choices do men and women make? Several factors contribute to the persistence of the pay gap, such as workplace flexibility, systemic discrimination, and career costs of family. We show that how the labor market responds to the narrowing of the gap is just as pivotal for understanding this persistence. When the gender pay gap declines in a specific sector, women are relatively more likely to seek jobs in that sector, while men readjust their search to less equitable sectors. These compositional effects decrease female participation in less equitable ...