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*.

I hand-collect data on the roll-out of mobile apps by banks in the U.S. over the previous decade and pair them with local, positive shocks to the importance of mobile services derived by interacting nationwide Federal Communication Commission mobile infrastructure improvement policies with counties' pre-existing share of mobile contracts. I find increased local competition among banks around these shocks, with poorly digitalized small community banks (SCBs) losing deposits and small business lending to larger, better digitalized banks (LBs). I further provide evidence that LBs are substituting the SCBs' traditional branch- and relationship-based model with more digital tools. However, this is not a one-to-one transition, especially in rural areas.

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

with Rawley Heimer (Arizona State University)

• MFA 2021*, SFS Cavalcade 2021*, FMA 2021*, EFA 2022*, MarketWatch, Business Scholarship Podcast.

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, Korajczyk, and Sadka (Journal of Finance, 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. The pattern also exists for volume, order imbalance, volatility, and spreads. 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. 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 over the expanded sample, but that few of the proposed causes have explanatory power. Hence, the pattern remains a puzzle.

Discussions