WORK IN PROGRESS
Central Bank Digital Currencies:
'Digital Currencies and Bank Competition'. Abstract:
This article examines how the issuance of a Digital Currency by a non-bank operator impacts competition between banks in a cashless society. I analyze how the fee charged for the digital currency impacts the interest rates on loans and the fees charged by banks to depositors for paying by card and opening an account in a bank. I derive the conditions under which consumers use the digital currency to pay.
'Bank-Platform Competition in the Credit Market', with Sara Biancini (Thema, Université de Cergy-Pontoise).
The paper analyzes the equilibrium on the credit market when a bank and a platform compete to offer credit to borrowers. The platform does not manage deposit accounts, but acts as an intermediary between the borrower and the investor, offering a risky contract such that the investor is only reimbursed if the borrower is successful. We first characterize the optimal contracts proposed by the platform, depending on the two-sided structure of the market. Then, we study the impact of bank-platform competition on the average risk of bank loans and the relative level of interest rates.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3446694Competition and Welfare Effects of Bailout Policies:
'Bailout Policies when Banks Compete with Switching Costs', with Noé Ciet (Université Paris 2).
In this paper, we analyze the welfare effects of bailout policies when banks compete
with switching costs. We compare no-bailout policies to systematic bailouts. We argue
that no-bailout policies increase the interest rates paid by borrowers ex ante (i.e., before
a shock), whereas they may reduce the interest rates paid by consumers who are not
credit constrained. Such policies increase social welfare ex post if borrowers can easily
switch banks and if the credit constraints are not too severe.
'What drives the expansion of the P2P lending', with Olena Havrylchyk
(Université Paris 1), with Carlotta Mariotto (ESCP LabeX ReFi), Talal
Rahim (Boston University), Best Paper Award at the Toronto FinTech Conference.
Peer-to-peer (P2P) lending platforms are online intermediaries that match lenders with
borrowers. We use data from the two leading P2P lending platforms on the US consumer credit
market, Prosper and Lending Club, to explore the main drivers of the expansion of demand for
P2P credit. We exploit the heterogeneity in local credit markets at the county level to test three
main hypotheses: 1) global financial crisis; 2) competition and barriers to entry; and 3) learning
costs. We find that P2P lending platforms have partly substituted for banks in counties that
were more affected by the financial crisis. High market concentration and high branch density
appear to deter the entry and expansion of the P2P lending. Finally, we find a positive impact
of variables that are correlated with lower learning costs, such as education, population density,
high share of young population, as well as important spatial interactions.