Tel. +34 93 542 2696
Available for interviews at
European Job Market for Economists (EEA)
Allied Social Science Associations (ASSA)
Primary: Banking, International Finance, Monetary Policy
Secondary: Corporate Finance and Political Economy of Finance
"Monetary Policy and Corporate Debt Maturity”(with L. Falasconi and J. Heineken) (Job Market Paper)
Does monetary policy influence the maturity structure of corporate debt? We answer this question exploiting: i) time-series and firm-level data on debt maturity for the US corporate sector; ii) several proxies of FED monetary interest rate shocks. Our results show that a loosening of the policy rate lengthens corporate debt maturity, an effect entirely driven by the adjustments of very large companies. We explain such findings through a model combining moral-hazard frictions and yield-seeking investors, who increase their demand of long-term debt-securities when the policy rate goes down. Only large and unconstrained companies can accommodate the demand shift. Empirical evidence on the response of corporate bonds’ issuance by large companies and holdings by mutual funds validates our proposed mechanism.
"Media Capture by Banks”(with R. Durante and J.L. Peydró)
Do banks exploit lending relationships with media companies to promote favorable news coverage? To test this hypothesis we map the connections between banks and the top newspapers in several European countries and study how they affect news coverage of two important financial issues. First we look at bank earnings announcements and find that newspapers are significantly more likely to cover announcements by their lenders, relative to other banks, when they report profits than when they report losses. Such pro-lender bias applies to both general-interest and financial newspapers, and is stronger for newspapers and banks that are more financially vulnerable. Second, we look at a broader public interest issue: the Eurozone Sovereign Debt Crisis.We find that newspapers connected to banks more exposed to stressed sovereign bonds are more likely to promote a narrative of the crisis favorable to banks and to oppose debt-restructuring measures detrimental to creditors.
"Capital Controls, Domestic Macroprudential Policy and the Bank Lending Channel of Monetary Policy”(with M. López-Piñeros, J.L. Peydró and P. Soto)
We study how capital controls and domestic macroprudential policy tame credit supply booms, respectively targeting foreign and domestic bank debt. For identification, we exploit: i) the simultaneous introduction of capital controls on FX-debt inflows and an increase of reserve requirements on domestic bank deposits in Colombia in 2007 during a strong credit boom; and ii) credit registry and banks’ balance-sheet data. First, our results show that an increase in the local monetary policy rate, raising the interest rate spread with the US, allows more FX-indebted banks to carry-trade cheap FX-fund with more expensive peso lending, especially in correspondence of larger deviations from the Covered Interest Parity (CIP) and towards riskier, opaque firms. Capital controls tax FX-debt and break the carry-trade. Second, the increase in reserve requirements on domestic deposits directly reduces credit supply, and more so for riskier, opaque firms, rather than enhancing the transmission of monetary rates on credit supply. Importantly, different banks finance credit in the boom with either domestic or foreign (FX) financing. Hence, capital controls and domestic macroprudential policy complementarily mitigate the boom and the associated risk-taking through two distinct channels.
"Capital Controls, Corporate Debt and Real Effects”(with M. López-Piñeros, J.L. Peydró and P. Soto)
Non-US firms have massively borrowed dollars (foreign currency, FX), leading to booms and crises. We show the real effects of capital controls, including benefits, through a firm-debt mechanism. For identification, we exploit a tax on FX-debt inflows in Colombia before the global financial crisis (GFC), and administrative, proprietary datasets, including credit register data and FX-debt inflows. Capital controls substantially reduce FX-debt inflows (larger for more FX-exposed firms). Moreover, firms with weaker local banking relationships cannot substitute FX-debt with domestic-debt, thereby reducing imports. However, capital controls improve exports during the GFC –by preemptively reducing pre-crisis firm-level debt–, especially for financially-constrained firms.
Research Papers in Progress
“Household Debt Revaluation, Credit Supply and Consumption: Evidence from a Natural Experiment" (with Jurica Zrnc)
“Empire-Building One Loan at a Time: Chinese Official Lending and Global Support for Chinese Foreign Policy" (with Ruben Durante and José Luis Peydró)
“Commodity Prices, Credit Supply and Regional Growth"