Research

Working Papers

Keeping Up in the Digital Era: How Mobile Technology Is Reshaping the Banking Sector (JMP)

• BC Brownbag*, BC-BU Green Line Macro Meeting*, Colorado Finance Summit 2022 (Job Market Session)*, MFA 2023*, EFA 2023*, FMA 2024*, Sydney Banking and Financial Stability Conference 2024* (scheduled).

I hand-collect data on the roll-out of mobile banking apps in the U.S. over the previous decade and pair them with local positive shocks to the importance of mobile services. I find that digital competition among banks increases in response to these shocks. Specifically, small community banks without or with low-quality apps (SCBs) lose deposits and small business lending to nearby larger and better-digitalized banks (LBs). Additionally, I provide evidence of a paradigm shift in local lending practices. While SCBs decrease their branch-based small business lending activities, better-digitalized LBs increase small business lending only in areas where they do not operate branches. A significant gap in local economic growth arises as LBs do not seem able to fully compensate for the decrease in SCB lending under this paradigm shift. 

The Financial Restitution Gap in Consumer Finance: Insights from Complaints Filed with the CFPB 

with Rawley Heimer (Arizona State University)

• MarketWatch, Business Scholarship Podcast

• MFA 2021*, SFS Cavalcade 2021*, FMA 2021*, EFA 2022*, Treasury-OCC* (scheduled).

Consumers seek restitution for disputed financial services by filing complaints with the Consumer Financial Protection Bureau (CFPB). We find that filings from low-income and Black zip codes were 30% less likely to be resolved with the consumer receiving financial restitution. The gap in financial restitution was scarcely present under the Obama administration, but grew substantially under the Trump administration. We attribute the change in financial restitution under different political regimes to companies anticipating a more industry-friendly CFPB, as well as to the more industry-friendly leadership of the CFPB achieving less financial restitution for low-income and Black filers. The financial restitution gap cannot be explained by differences in product usage nor the quality of complaints, which we measure using textual analysis.

Work-in-Progress

Who generates the predictability in the cross-section of intraday stock returns?

with Steven L. Heston (University of Maryland), Robert A. Korajczyk (Northwestern University), Ronnie Sadka (Boston College)

Heston et al. (2010) find a pronounced intra-day pattern in stock prices in which stocks with higher-than-average returns in half-hour time period of the trading day tend to have higher-than-average returns in the same half-hour time period of the trading day on subsequent days. The pattern in statistically significant for at least 40 trading days. We study the same phenomenon, out of sample, over the period 2010 to 2020. This allows us determine if the results are robust, as opposed to either subsequently arbitraged away or due to data snooping. We find that pattern persists. We expand the analysis to include the overnight period and investigate a set of possible causes of the pattern such as the influence of institutional and retail traders, short selling costs, periodicity of the news cycle.

Discussions