UCLA

In Chapter 1, I explore the digital divide in homeownership outcomes as better financial opportunities increasingly move beyond the technology frontier. Low-income households derive significantly less savings from mortgage refinancing than their wealthy counterparts. I document that the rise of refinancing inequality in the United States can be partially explained by the gap in access to modern information and communications technology. Using granular spatial variation of a large-scale broadband subsidy program, I show that high-speed internet facilitates refinancing activity and reduces monthly mortgage payments. These effects are large and persistent, corresponding to a 5 percent increase in disposable income and up to $18,000 in total savings for low-income households. The growth of refinancing is pronounced in underserved areas with low access to bank branches and among populations that are likely to have low financial and digital literacy.

In Chapter 2 (with Andrea L. Eisfeldt and Dimitris Papanikolaou), we show that the recent underperformance of value investing strategies can be attributed to the mismeasurement of intangible assets. We propose a simple improvement to the classic Fama and French value factor that incorporates intangibles and addresses differences in accounting practices across industries. Our intangible value factor prices assets as well as or better than the traditional value factor but yields substantially higher returns. This outperformance holds over the entire sample period, including in more recent decades during which value has underperformed. We also find evidence that the adjustment better identifies firms with superior fundamentals as measured by productivity, profitability, and financial soundness.

In Chapter 3 (with Marcelo Rezende), we study whether regulatory costs induce banks to search for yield by holding riskier assets. We test this hypothesis by analyzing a cost specifically imposed on the size and composition of a bank's balance sheet -- deposit insurance premiums charged by the Federal Deposit Insurance Corporation (FDIC). Using supervisory data and a sharp cutoff in the schedule of deposit insurance premiums, we show that higher balance sheet costs indeed cause banks to substitute excess reserves (a liquid asset with no credit risk) for short-term interbank loans (a less liquid asset with credit risk). We argue that optimal deposit insurance pricing should account for this potential feedback effect.