Research Interests

Organizational Economics, Banking, Financial Intermediation, Labor Economics, Emerging Markets

Working Papers

EFMA Best PhD Paper Award, MFA Outstanding Paper Award

Abstract: How do lenders improve contract enforcement when institutions are weak? To increase pledgeability of farmers' output, a large agribusiness lender in Brazil constructs grain storage silos. Once deposited in the warehouse, grain can be seized by the lender. Warehouse access also permits a new credit contract, repayable in grain. This contract transfers the ownership of grain to the lender, restraining the borrower from diverting the proceeds. The improved collateralization increases debt capacity and lowers interest rates. The effects are stronger for municipalities with weaker courts and financially-constrained borrowers. Results resonate with credit by commodity traders to producers and custodian lending.

R&R Review of Financial Studies (2nd round)

AbstractAbstract We exploit a variation in organizational hierarchy induced by a reorganization plan implemented in roughly 2,000 bank branches in India, to investigate how organizational hierarchy affects the allocation of credit. We find that increased hierarchization of a branch induces credit rationing, reduces the performance on loans, and generates standardization in loan contracts. Additionally, we find that hierarchical structures perform better in environments characterized by a high degree of corruption, highlighting the benefits of hierarchies in restraining rent-seeking activities. Overall, our results are consistent with the view that valuable information may be lost in hierarchical structures.

Abstract: Exploiting a sharp discontinuity in the application of an unexpected unemployment insurance (UI) reform in Brazil, we find that workers are more likely to be laid off when they are eligible for UI benefits, accounting for twelve percent of unemployment inflow around the eligibility threshold. We document layoff and rehiring patterns consistent with collusion between firms and workers to time unemployment spells with eligibility for UI benefits, explaining at least twenty percent of the additional unemployment inflow. Firms seem to benefit from strategic behavior by paying lower equilibrium wages. Collusive patterns increase with the potential rents that can be extracted from the UI system. When laying off workers eligible for UI benefits, firms are less likely to hire a replacement worker. This suggests that firms continue to employ workers informally while on benefits, and is consistent with all of the documented effects being stronger in the presence of large informal labor markets.

Work in Progress

Organizational Design of Risk Management (with Rajesh Chandy, Ahmed Tahoun, and Vikrant Vig)

Vertical Integration and Input Specificity (with Dimas Fazio and Thiago Silva)

Firm Risk and Firm-Worker Selection (with Bernardus van Doornik and David Schoenherr)

Propagation of Shocks and Network Fragility (with Dimas Fazio and Thiago Silva)