4. Flight from Policy: Economic Uncertainty and Bitcoin Adoption (under review) with Prachi Deuskar, Vasundhara Sharma and Denis Rohit Tirkey
Abstract: When economic policy uncertainty rises, investors should flee volatile assets. Yet, we document that they flock to one of the most volatile: Bitcoin. First-time entrants, those with no prior position and no offsetting exposure, buy most aggressively and earn 5 to 30 percent higher returns than calm-period entrants, while experienced incumbents sell. These findings reflect a nuanced notion of flight-to-safety: Bitcoin's immunity to discretionary policy makes it a refuge regardless of its volatility. Using blockchain data (2014-2024) and cross-country app downloads, we show policy uncertainty induces entry, leads incumbents to provide liquidity, and draws new miners into irreversible investment. The mechanism has a sharp conditional prediction: the buyer-seller asymmetry reverses during crypto winters, when crypto-native policy uncertainty dominates. This flight-from-policy channel expands the notion of safety from low volatility to immunity to the specific risk that is elevated.
3. Buy Now, Pay Later and Purchase-level underwriting (under revision)
Abstract: This paper examines the value and impact of using purchase-level information, specifically its role in alleviating the information asymmetry in the credit markets. Using a proprietary lending dataset from a firm operating in the BNPL industry, I evaluate the underwriting practices of the lender and document three findings - i) the lender's internal score predicts the likelihood of a loan defaulting with 18% greater accuracy than traditional credit score, ii) the lender's internal score incorporates purchase-level information, and iii) the lender prices a significant portion of loans using purchase-level information. I find that a model that includes purchase-level information can lend 33 percentage points more in loan count, increasing financial inclusion without having a negative effect on the default rate and also generating higher returns for the lender. Similarly, a model that includes purchase-level information reduces default by 3 percentage points. Leveraging a randomized experiment conducted by the lender and discontinuity in lender pricing, I find that a 10 percentage point increase in offered interest rate decreases applicant take-up by 14.25 percentage points with no significant impact on the loan performance.
2. Corporate Dividend Policy, co-authored with Mark Leary, Handbook of Corporate Finance (edited by David J Denis), 2024.
1. Creditors’ Rights, Threat of Liquidation, and the Labor and Capital Choices of Firms (2022), co-authored with Shashwat Alok and Ritam Chaurey, Journal of Law and Economics, 65(4), 687-714.
5. The Role of Fintech in Government-Guaranteed Loan Lending with Shashwat Alok and Pulak Ghosh
6. Firm response to greater creditor protection.