Abstract: Banks expand their branching network in areas that subsequently exhibit economic growth.  But what direction does causality run?  I exploit variation in completion across planned bank branches to disentangle selection and treatment effects of branch entry on local growth.  Areas where a bank planned to open a branch but did not exhibit higher growth as measured by light emissions than similar areas (reflecting a selection effect).  However, locations where a bank opened a branch only slightly outgrow locations where a bank planned to open a branch but did not (treatment effect).  Selection effects are present over a broad area around proposed branches, whereas treatment effects are confined to their immediate vicinity.  These findings contrast with previous studies reporting positive treatment effects of branch expansion and instead emphasize banks' skill in selecting locations poised for growth.

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Abstract: We illustrate the sensitivity of two-way fixed effects difference-indifferences estimates to innocuous changes in data structure. Using the staggered rollout of state-level bank branching deregulations, three outcome variables are brought to bear on the interventions: personal income growth (a replication), house prices (new to the literature), and per capita cigarette purchases (a falsification test). Estimates are sensitive to panel length, and the data structure creates the false impression of a causal effect of the interventions on all three outcome variables. We contend that any two-way fixed effects regression using this set of interventions is at risk of generating spurious results.

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Abstract: Whether mergers lead to improved operating performance remains unclear due to the challenge of constructing appropriate counterfactuals. Using synthetic controls, we generate bespoke (i.e., merger-specific) counterfactuals that more precisely reflect pre-merger trends and characteristics than traditional methods. We find that the average merger leads to small improvements in profitability stemming from increased markups which outweigh declines in operational efficiency.  Acquirers are roughly twice as likely to experience increases in markup and decreases in efficiency as to experience the opposite.  These effects vary substantially across mergers and relate to firm characteristics in a way consistent with agency and market power theories.

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Abstract: Does opening a stock exchange improve a nation’s economic outcomes?  Using modern econometric technology, we estimate that opening an exchange increases national ten-year per capita GDP growth by 13+ percentage points.  This effect strengthens over time and is driven primarily by countries with strong governance.  We use satellite data to evaluate the spatial distribution of this growth effect within exchange-opening countries.  We estimate that opening an exchange increases ten-year growth in light emissions by 28 percentage points in the city where the exchange is located.  This effect weakens farther from the exchange, consistent with a causal interpretation of our results.

Draft coming soon