Working Papers

Political Voice and (Mortgage) Market Participation: Evidence from Minority Disenfranchisement with Seongjin Park and Nishant Vats

Abstract: This paper documents the link between political voice and economic decision-making. Combining the repeal of Section 5 of the Voting Rights Act as a shock to the enfranchisement of black Americans with granular data on the US mortgage market, we document a 14% decline in mortgage origination for black Americans. This is driven by their self-selection out of the mortgage market rather than a change in denial rate. Additionally, we observe a flight of black demand to black lenders, indicating an increase in racial homophily. Our results indicate that disenfranchisement reduces demand directly by increasing uncertainty, violence, and borrowing constraints and indirectly by increasing the threat of rejection. 

Conferences:  2021 Trans-Atlantic Doctoral Conference, Asia-Pacific Corporate Finance Online Workshop, ISB-CAF Summer Research Conference 2021, CUHK greater bay area conference, Misra Centre for Financial Markets and Economy (IIM Ahmedabad), Conference on Financial Economics and Accounting 2021, 2022 Meeting of the American Finance Association, SGF Conference 2022, Mortgage Market Research Conference Federal Reserve Bank of Philadelphia, Federal Reserve Bank of Chicago Workshop on improving minority and low-income homeownership experiences, 2023 meeting of American Real Estate and Urban Economic Association, SFS Cavalcade 2023

Political Power-Sharing, Firm Entry, and Economic Growth: Evidence From Multiple Elected Representatives with Harsha Dutta, Pulak Ghosh, and Nishant Vats

NYU-NSE Initiative for Emerging Market Studies (Research Grant) 

Abstract: Should political institutions concentrate power in more hands or a single hand? This paper provides microeconomic evidence on the relationship between multiple elected representatives and economic growth. We find that increasing the number of politicians governing an area leads to greater firm entry and real economic activity. The identification strategy exploits uneven overlap of electoral and administrative boundaries, leading to a quasi-random variation in the number of politicians governing adjacent administrative units. This setup allows us to implement a geographic regression discontinuity design across boundaries separating a split (multiple politicians) unit from an unsplit (single politician) unit. Greater state efficiency, lower regulatory costs, and reduced cronyism due to increased checks and balances among multiple non-aligned politicians is the primary driver of higher firm entry. 

Conferences:  NSE-NYU conference 2021, BREAD Conference on Development Economics 2022, EFA 2022,  100 Years of Economic Development Conference, BREAD-CEPR-IFS-TCD Workshop in Development Economics 2022, Finance Down Under 2023

Dirty Air and Green Investments: The impact of pollution information on portfolio allocations with Raymond Fisman, Pulak Ghosh, and Jian Zhang

Abstract: We study exposure to pollution information and investment portfolio allocations, exploiting the rollout of air quality monitoring stations in India. Using a triple-differences framework, we show that retail investors' investments in ``brown'' stocks are negatively related to local air pollution, but only after a monitoring station appears nearby; there are particularly pronounced effects on ``alert'' dates when air quality is listed as harmful to the general population. The effect of pollution information on investment choices is most prominent amongst tech-savvy investors who are most plausibly ``treated'' by real-time pollution data, and by younger investors who tend to be more sensitive to environmental concerns. Overall, our results provide micro-level support for the view that salience of environmental conditions affect investors' tastes for green investments.

Conferences:  EFA 2023, Climate Finance Conference, Baruch College 2024, Adam Smith conference 2024 (scheduled), ABFER 2024 (scheduled)

Smokestacks and the Swamp with Emilio Bisetti, Stefan Lewellen, and Xiao Zhao

Best Paper Award (CAF Summer Conference, Indian School of Business 2022)  

Abstract: We examine the causal effect of politicians' partisan ideologies on firms' industrial pollution decisions. Using a regression discontinuity design involving close U.S. congressional elections, we show that plants increase pollution and invest less in abatement following close Republican wins. We also find evidence of reallocation: firms shift emissions away from areas represented by Democrats. However, costs rise and M/B ratios decline for firms whose representation becomes more Democratic, suggesting that politicians' ideological demands can be privately costly. Pollution-related illnesses spike around plants in Republican districts, suggesting that firms' pass-through of politicians' ideologies can have real consequences for local communities. 

Conferences:  ISB CAF conference (2022)*; CSR conference Chicago (2022); Singapore Scholars Symposium (2022), FIRS (2023); Copenhagen Money in Politics conference (2023)*, EFA poster session (scheduled), HEC-HKUST Sustainable Finance Workshop, Midwest Finance Association (2022), 2nd London Political Finance (POLFIN) Workshop*, Asia-Pacific Corporate Finance On-line Workshop 

Political Economy of Financial Regulation with Rainer Haselmann, Shikhar SIngla, and Vikrant Vig

Abstract: Increased interdependencies across countries have led to calls for greater harmonization of regulations to prevent local shock from spilling over to other countries. Using the rulemaking process of the Basel Committee on Banking Supervision (BCBS), this paper studies the process through which harmonization is achieved. Through leaked records, we document that the probability of a regulator opposing an initiative increases if their domestic national champion (NC) opposes the new rule, particularly when the proposed rule disproportionately affects them. Next, we show that smaller banks, even when they collectively have a higher share in the domestic market, do not have any impact on regulators’ stand – suggesting that regulators’ support for NCs is not guided by their national interest. Further, we find the effect is driven by regulators who had prior experience working in large banks. Finally, we show this unanimous decision-making process results in significant watering down of proposed rules. Overall, the results highlight the limits of harmonization of international financial regulation. 

Conferences:  ABFER 2023, WFA 2023 (Scheduled), EFA 2023 (Scheduled), ISB CAF conference 2023 (scheduled)

Policy Uncertainty, Multinational Firms, and Reallocation  

Best Paper Award (CAF Summer Conference, Indian School of Business 2020)  

Abstract: Multinationals are often considered a tool through which economic shocks originating in a region get magnified. This paper, in contrast shows that elevated economic policy uncertainty (EPU) in a country is associated with increase in investment by a firm in other regions. I find that (multinational) firms hold back investment in a country subjected to higher EPU which they reallocate to projects in other countries. I find the impact to be higher for firms with tighter financial constraint. I also find the reallocation is directed more towards countries that provide a better legal environment. The study uses establishment-level data of mining firms as a laboratory. Limited input-output linkage across mines allows me to study the impact caused particularly through the allocation decision of firms. The empirical strategy exploits the variation in: i) parent country of mines operating in the same country; & ii) country of operation of mines owned by same firm. Overall my findings highlight that multinationals could potentially stabilize the escalation of regional policy uncertainty shocks to global crisis.

Conferences:  HEC Paris Finance PhD Workshop 2019,  LBS PhD Alumni Workshop 2019, Trans-Atlantic Doctoral Conference 2019,  CAF Summer Conference, Indian School of Business 2020, NFA 2021, AFA 2022 

Firm Boundaries and Political Uncertainty: Evidence from State Elections in India

Cubist Systematic Strategies Ph.D. Candidate Award for Outstanding Research, WFA 2017

Abstract:  Using subsidiary-level data for Indian firms and staggered elections across Indian states, this paper finds that political uncertainty's impact on firm performance varies by organizational form. The analysis builds on the idea that a firm belonging to a conglomerate, when exposed to political uncertainty is co-insured by other firms of the group. In states with imminent elections, I find stand-alone firms have relatively low leverage and high borrowing cost. The impact, however, is attenuated for stand-alones with lesser borrowing constraints. The results are consistent with being driven largely by the (reduced) supply than (subdued) demand for capital.

Conferences: WFA 2017, AFA PhD Poster session 2017, LBS Trans-Atlantic Doctoral Conference 2017, ISB Summer Research Conference 2017, CICF 2018, IIM Calcutta Financial Research Workshop, 2018, ABFER 2021