Job Market Paper
Assessing Bank Deposit Market Power Given Limited Consumer Consideration Link
Accurate assessments of bank deposit market power are essential for antitrust and monetary policy. Regulators and researchers have traditionally measured market power assuming all consumers consider every bank operating in a given geographic region. However, these measures are generally biased because, in practice, consumers only consider a small fraction of the available banks. I propose a new model of bank deposit competition that provides a market power measure that accounts for consumers' limited consideration of banks. I estimate the model for the twenty largest US Metropolitan Statistical Areas over 2004 to 2018 using rich data on bank deposit interest rates, bank advertising, and the distance between consumers and bank branch locations. Accounting for consumers' limited consideration shows that traditional measures underestimate the market power of online direct banks, poorly capture how market power contributes to heterogeneous bank pass through of federal funds rate changes, and support an inefficient proposal for strengthening bank competition. Whereas assuming full consideration recommends further bank deregulation, I find that the best plan for strengthening competition is to facilitate the launch of an online direct bank by a major technology company.
Extracting Features from Bank and Mortgage Company Commercials Link
What is said and shown in television commercials and how does this content impact consumer behavior? I apply machine learning algorithms to extract rich text and image features from over 20,000 bank and mortgage company commercials airing between 2004 and 2015. Among other statistics, the text features reveal that only 30% of bank commercials mention any products in contrast to over 80% of mortgage company commercials. Meanwhile, the image features show that actor demographics are representative of the US population with the exception of white women. I then use discontinuities in advertising exposure created by television market borders to determine the effect of actor race on consumer mortgage refinancing decisions. I find that a 1% increase in television commercials with white actors causes a 0.16% increase in the fraction of white homeowners who apply for refinancing. In contrast, black homeowners are not more likely to refinance when exposed to black actors and are 0.07% less likely to apply for refinancing when there is a 1% increase in commercials with only white actors.
Finding Exogenous Variation in Data with George Gui and Ali Hortacsu Link
We reconsider the classic problem of recovering exogenous variation from an endogenous regressor. Two-stage least squares recovers exogenous variation through presuming the existence of an instrumental variable, and then uses that variation in a second stage to consistently estimate a parameter of interest. We propose a new method for finding exogenous variation that works in settings where the regressor is a mixture random variable. Here either the transitions between components or one of the components itself can provide sufficient exogenous variation to identify the parameter of interest. We demonstrate that our method works in simulation and can be used to find the effect of pricing experiments hidden in grocery store scanner data.
Securities Crowdfunding: More than Family, Friends, and Fools? Link
The US securities crowdfunding market opened on May 16th, 2016. I provide the first description of the companies and investors participating in this market using data on the full universe of Regulation Crowdfunding issues. I then demonstrate that investment in an issue is closely tied to economic fundamentals after the first week. This result is consistent with unsophisticated investors arriving in the first week and investing indiscriminately and relatively more sophisticated investors arriving thereafter. Based on this evidence, I conclude that the market provides a promising new way for high quality early stage companies to seek financing.
Work In Progress
How Can Research Registries be Improved? An Examination of the AEA RCT Registry with Jonathan Libgober and John List