Regulation of many industries is funded with fees paid by regulated firms. In a new paper with Roni Kisin, we use this feature to gain insight into the regulatory process and measure the effects of this pervasive model of regulation. Using a novel dataset on fees and regulatory enforcement actions in the banking sector, and exploiting kinks in fee schedules as a source of exogenous variation, we find that regulators are more lenient with higher fee paying banks.
Best Paper Award, Financial Research Association Meetings 2013
In a paper with Roni Kisin, we estimate the shadow cost of capital requirements for banks using data on their participation in a costly regulatory loophole. We estimate that a ten percentage point increase in capital requirements would cost $2.2 billion a year for all banks that exploited the loophole combined, and no more than $3.7 billion for all US banks. The average cost per bank is $143 million, or 4 percent of annual profits.
Presentations: UCLA (Anderson), UNC (Kenan-Flagler), INSEAD, Wharton Conference on Liquidity and Financial Crises, FDIC-JFSR Fall Banking Research Conference, FRA Meetings in Las Vegas, FIRS Meetings in Quebec, AFA 2015 Meetings in Boston.
Named for World's Best 40 Business School Professors Under 40, Poets & Quants
Asset Pricing, Financial Intermediation, Information Economics.