Research

Publications

"Macro-Banking Stability, Sovereign Debt and the Inflation Channel," with Qingqing Cao and Raoul Minetti. Finance Research Letters, 2025.
We investigate the impact of inflation on banking stability. Using granular U.S. data from 1997 to 2014, we show that higher inflation induces a significant deterioration of banks’ capital position because of the maturity mismatch of banks’ assets and liabilities. Quantitative analysis reveals that the elasticity of banking capital to long-term inflation expectations is high, as a 1% increase to long-term inflation expectations leads to a 15% decrease in banks’ Tier 1 capital. The analysis suggests that the use of inflation to reduce sovereigns’ real debt burden could aggravate the sovereign-bank loop during debt crises. 

Working Papers

"Digitalization in Banking: Evidence from the New York Cybersecurity Regulation," with Sotirios Kokas & Francesco Vallascas.  

Can regulation drive banks' technological transformation? We exploit New York State's 2017 cybersecurity regulation as a natural experiment to examine how mandatory minimum cybersecurity standards affect IT investment and digitalization in banking. We find that banks subject to the regulation increase IT budget and change significantly their website architecture, compared to non-regulated banks. These technological upgrades lead to increased mortgage applicant distance, internet banking usage, and website traffic growth. Treated banks appear to reallocate lending across their branch network, closing some branches and relocating loan production to branches closer to the bank headquarters. Taken together, the results suggest that the cybersecurity regulation catalyzed the digitalization of treated banks.

"Financial Development, Financial Heterogeneity, and Export," with Raoul Minetti & Pierluigi Murro. Under review.
Credit sectors differ in depth and composition. We study financial development in an industry model of trade where the credit sector is heterogeneous and banks specialize in firm domestic or foreign activities. Internationally oriented banks encourage exports. Local banks’ expansion democratizes export by allowing financially vulnerable firms to enter foreign markets. However, it also fragments the export sector, inducing financially strong exporters to focus on domestic markets by reducing export intensities. Model calibration reveals that, in aggregate, local financial development can moderate inter-firm inequalities driven by internationalization while reducing trade flows. The predictions are consistent with evidence from Italian microdata.