Research Statement

General Statement

I am an applied economist with research interests in financial regulation, banking, monetary & financial history, law and economics, political economy, fintech, macro-finance, and international macroeconomics and finance.

My research can be split into three large areas: Financial Regulatory Cycle, Political Economy of U.S. Financial Regulation, and Macro-Finance.

Financial Regulatory Cycle

A strand of my research has focused on U.S. ﬁnancial regulation and its cyclicality.

I present the idea of the financial regulatory cycle in the United States. I show that there have been three long cycles of financial regulation since the independence of the country in 1776. Moreover, there are also smaller cycles within these long regulatory cycles. Contingent capital may be a measure to curb the impact of the cycle.

I also wrote a chapter on ﬁnancial deregulation in the U.S. in the 1980s (2021. Financial Deregulation in the United States. In Financial Deregulation: A Historical Perspective. Oxford University Press.). In this chapter, I argue that the regulatory changes that occurred in the 1980s changed the proﬁle of the U.S. banking system from a not very competitive and stable system to a competitive, but unstable one. Between the Great Depression to the 1980s, the U.S. banking regulators favoured stability. The financial deregulation of the 1980s changed this sector to a competitive, yet unstable one. This deregulatory process occurred mostly as a response to the economic conditions of the 1970s.

Papers:

The Financial Regulatory Cycle: https://ideas.repec.org/p/san/wpecon/2006.html

The Advent of a New Banking System in the U.S. - Financial Deregulation in the 1980s: https://ideas.repec.org/p/san/wpecon/2003.html

Political Economy of U.S. Financial Regulation

Another strand of my research focuses on the political economy of U.S. ﬁnancial regulation. It studies how political factors influence financial regulation.

My main research paper in this area, The Making of Financial Regulation - Voting on Financial Regulation in the U.S. Congress, looks at how ﬁnancial regulation is produced. Despite vast and rich studies on optimal ﬁnancial regulation, ﬁnancial crisis keep occurring, plausibly to a large extent due to poor regulation. In this paper, I draw on a comprehensive dataset to look at the role of four important factors, namely campaign contributions, constituency interests, economic conditions, and ideology, on ﬁnancial regulation production. This study analyses the impact these factors have on the voting patterns of congressmen in bills that attempted to change ﬁnancial regulation in the U.S. between 1991 and 2014.
This paper expands on the current literature by gathering all the existing data on campaign contributions and, hence, using the most comprehensive dataset ever assembled. Additionally, it is the ﬁrst time someone looks at these factors in such a long-term perspective and controls for the economic conditions. I show that campaign contributions cause an increase in the likelihood of voting in favour of deregulatory bills. Furthermore, constituency interests are associated with a reduction in the probability of voting in favour of bills increasing the regulatory burden for ﬁnancial companies.

Another research agenda of mine focuses on understanding the gains of political involvement for ﬁnancial companies. In my paper, Are Campaign Contributions a Lucrative Investment for Financial Companies? - Return on Investment of Campaign Contributions, I attempt to measure the quantiﬁable returns U.S. ﬁnancial companies receive from this type of political investments. This paper is one of the very few attempts to measure the returns of these investments. For this purpose, I construct a dataset with political and ﬁnancial variables. This paper ﬁnds that the political engagement of ﬁnancial companies is associated with lower proﬁtability, more risk-taking and a higher likelihood of being bailed-out. Its results corroborate the believe that private companies get involved in the political process for private beneﬁt.

My last paper in this research line, Investors as Politicians - How Do Politicians with Investments in Financial Companies Behave as Financial Regulators?, attempts to shed light into how the investment portfolio of legislators may inﬂuence their voting. Particularly looking at investments in ﬁnancial companies, I show that having investments in ﬁnancial companies is an important factor in the voting behaviour of congressmen. Being an investor in ﬁnancial causes an increase of around 9 percent in the likelihood of voting for a smaller regulatory burden increases even when controlling for other incentives and political and ideological preferences. I report they are especially relevant when voting for bills proposing to tighten ﬁnancial regulation.

Work in Progress

Macro-Finance

My current research, pursued together with Solomos Solomou, studies the link between credit cycles, financial crises, and medium-term economic growth using a historical perspective. This project intends to develop our understanding of medium-run economic growth, analyse the relationship between credit cycles and medium-run swings in economic growth, identify and explain the heterogeneity in the impact of ﬁnancial crises across countries and model the global and regional transmission of ﬁnancial crises. This project will provide an historical perspective to evaluate the relationship between credit cycles, ﬁnancial crises and medium term economic growth within a broad multivariate framework that allows for ﬁnancial eﬀects on the real economy but at the same time allows for other variables to have an impact on medium-term growth outcomes.

Open Banking

My work in Open Banking studies the growth of challenger banks through Open Banking policies within the retail banking sector in the United Kingdom. For this purpose, we will analyse the demand and supply of the products and services offered by these institutions. To do this, we built a database of banking variables for both challenger and established banks. We find that there is a growing demand, however, these banks face important supply constraints. This is the first analysis on the performance of open banking in the United Kingdom.