Date of Award
5-10-2024
Degree Type
Dissertation
Degree Name
Doctor of Philosophy (PhD)
Chair and Committee
Brett Green
Committee Members
na
Abstract
Technological improvements and laws impact financial system processes. Within this context, my dissertation focuses on studying how technological innovations are changing existing financial system processes, what role these innovations play in the broad financial eco-system, and the intended or unintended consequences of technology/policies, with a particular focus on credit markets. In chapter 1, I study how the introduction of technology and big data has transformed the consumer credit underwriting process by examining new data points generated by purchase-level or transaction-level underwriting. Using a proprietary lending dataset, I document three empirical findings - i) the lender’s specialized signal as reflected by their internal score predicts the likelihood of a loan defaulting with greater accuracy than publicly known credit score, ii) lender’s internal score incorporates consumer’s purchase-specific information, and iii) lender uses the specialized information i.e. purchase-level information to price a significant portion of the approved loans. In addition, incorporating purchase-level information seems to improve the credit market efficiency. In chapter 2, we study what role and functions do cryptocurrencies fulfill in the financial ecosystem. Particularly, we examine how global policy uncertainty affects the behavior of cryptocurrency investors and find that there is diverging trading behavior between large and small traders. Large traders are net buyers of Bitcoin, while small traders are net sellers. With respect to economic policy uncertainty, we find that large traders understand the diversifying benefits of cryptocurrencies, but small traders do not. In chapter 3, we study the unintended consequences of a creditor rights law has on targeted firms’ real economic decisions. Particularly, we evaluate the impact of a legal reform that strengthened creditor rights in India on firms’ real decision regarding their capital and labor decisions, and we find that firms increased employment and reduced their capital investments. These effects are stronger for firms in regions with less-efficient courts. These results are consistent with an increased threat of liquidation for firms following the passage of the law.
Recommended Citation
Nukala, Vasudha Mallika, "Essays on Consumer Finance, FinTech and Credit Markets" (2024). Olin Business School Electronic Theses and Dissertations. 44.
https://openscholarship.wustl.edu/olin_etds/44