Research

• Do depositors care about the biodiversity behavior of their banks? click here 

[Job Market Paper]

• This paper investigate whether banks associated with biodiversity loss in the Amazonia experience a depositor movement as depositors become aware of their financing activity. Using the number of endangered species within a county as a proxy to biodiversity risk exposure, I provide empirical evidence that Amazon carbon banks experience a significant decline in their deposit growth compared to other banks. This effect becomes more pronounced if the branch of Amazon carbon banks is in counties that face higher biodiversity losses compared to the counterfactual. In dollar terms, this translates into approximately $66 million reduction in deposits for an average bank-county deposits in my sample. My result shows that this movement hold mostly among insured deposits and this is driven by pro-social preferences of households and depositors. Thus, I shed light on the need to promote greater transparency in the financial sector regarding their environmental impact and suggests the increasing public awareness on banks' contribution to biodiversity loss.

Working Papers

• Environmental Incidents and Sustainability Pricing Provisions (with H. Nguyen)  click here 

Abstract: We investigate whether lenders employ sustainability pricing provisions to manage borrowers’ environmental risk. Using unexpected negative environmental incidents of borrowers as exogenous shocks that reveal information on environmental risk, we find that lenders manage borrowers’ environmental risk by conventional tools such as imposing higher interest rates, utilizing financial and net worth covenants, showing reluctance to refinance, and demanding increased collateral. In contrast, the inclusion of sustainability pricing provisions in loan agreements for high environmental risk borrowers is reduced by 11 percentage points. Our study suggests that sustainability pricing provisions may not primarily serve as risk management tools but rather as instruments to attract demand from institutional investors and facilitate secondary market transactions.

• Supply chain disruption and firm outcomes in the EU (with M. Koetter & H. Nguyen)  click here 

Abstract: This paper examines how firms’ exposure to supply chain disruptions (SCD) affects firm outcomes in the European Union (EU). Exploiting heterogeneous responses where each sourcing country which provides intermediate goods to firms in EU imposes workplace closures during the pandemic as a shock to SCD, we provide empirical evidence that firms in industries that rely more on foreign inputs experience a significant decline in their sales compared to other firms. We document that external finance, especially bank finance, plays an important role in mitigating the effect of SCD. We link our findings to the uniqueness of bank loans for small and solvent firms. Our result also indicate that highly diversified firms and firms that source their inputs from less distant partners are less vulnerable to SCD.