This paper examines how good borrowers use the design of performance sensitive debt contracts to alleviate financial constraints. I show that borrowers use a convex pricing grid (i.e., a contract where the increase in the loan spread following a decline in performance exceeds the decrease in the...

We study the career paths of more than 45 million workers during the house price run-up of the early 2000s. We find that individuals switch careers to become real estate agents (REAs) at higher rates in areas with stronger house price growth, despite little or no growth in average REA wages. We...

We show that banks significantly under-report the risk in their trading book when they have lower equity capital. Specifically, a decrease in a bank's equity capital results in substantially more violations of its self-reported risk levels in the following quarter. The under-reporting is...

We study the key drivers of security design in the residential mortgage-backed security (RMBS) market during the run-up to the subprime mortgage crisis. We show that deals with a higher level of equity tranche have a significantly lower delinquency rate conditional on observable loan...

We show that the steep decline in traditional bank mortgage lending after the crisis was primarily driven by a widespread withdrawal by the four largest U.S. banks (Big4). In contrast, small banks maintain their aggregate share in this market despite rapid nonbank growth throughout the country....