Abstract

Antitrust regulations in banking have historically targeted commercial banking activities. In the first chapter, I ask does the consolidation of investment banks have competitive effects? Using the geographically fragmented municipal bond underwriting market as a natural laboratory and employing a stacked difference-in-differences specification, I find that the underwriting spread increases by 4.8% of its sample mean following within-market consolidation. The effects double for larger M&As or in more concentrated markets and do not dissipate over time. These M&As do not generate efficiency gains that manifest as lower bond yields or substitution of other issuer-paid services. The findings remain robust when examining M&As less prone to endogeneity concerns and are absent in several placebo tests. Further, Census data suggest that such consolidation is followed by higher financing costs and reduced issuance. My findings offer a novel perspective on bank antitrust regulations, which are currently in the spotlight for revision and modernization. In the second chapter, coauthored with Radha Gopalan and ALminas Zaldokas, we investigate another question at the intersection of finance and antitrust: the consequences of interlocking directorates between competing firms. We document that a firm’s gross margin increases by 0.8 p.p. after forming a new direct board connection to a product market peer. Gross margin also rises by 0.4 p.p. after a connection is formed to a peer indirectly through a third intermediate firm. Further, using barcode-level data of 2.7 million products, we show that new board connections are related to higher consumer good prices, a greater tendency for market allocation, and slower new product introductions. The effects are stronger when the newly connected peers share corporate customers or have similar business descriptions and hold when controlling for other inter-firm relationships. In the third chapter, coauthored with Paul Gertler, Brett Green, and David Sraer, we study Pay-as-you-go (PAYGo) financing, a novel contract that has recently become a popular form of credit, especially in low- and middle-income countries (LMICs). PAYGo financing relies on lockout technology that enables the lender to remotely disable the flow benefits of collateral when the borrower misses payments. This paper quantifies the welfare implications of PAYGo financing. We develop a dynamic structural model of consumers and estimate the model using a multi-arm, large scale pricing experiment conducted by a fintech lender that offers PAYGo financing for smartphones. We find that the welfare gains from access to PAYGo financing are equivalent to a 3.4% increase in income while remaining highly profitable for the lender. The welfare gains are larger for low-risk consumers and consumers in the middle of the income distribution. Under reasonable assumptions, PAYGo financing outperforms traditional secured loans for all but the riskiest consumers. We explore contract design and identify variations of the PAYGo contract that further improve welfare.

Committee Chair

Brett Green

Committee Members

Anjan Thakor; David Sraer; Nishant Vats; Todd Gormley

Degree

Doctor of Philosophy (PhD)

Author's Department

Finance

Author's School

Olin Business School

Document Type

Dissertation

Date of Award

5-22-2025

Language

English (en)

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Finance Commons

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