Working papers

Pro-Trump Partisanship and COVID-19 Mortality: A Model-Based Counterfactual Analysis (with Dominik Liebl). (September 2021), PDF.

Abstract: We show that a higher share of Trump voters (who are less likely to comply with COVID-19 public health guidelines than Democratic voters) in a U.S. county leads to significantly more COVID-19 deaths during times of high regional infection risk. Our model-based counterfactual analysis finds that about 15 percent of the cumulative death rates in pro-Trump counties after the first year of the pandemic can be explained by a pro-Trump partisanship effect. The analysis considers demographic and socioeconomic differences between counties, unobserved heterogeneity on county and interacted week x state level, and non-linear effects due to spatiotemporal differences in infection risks.

On the Relationship between Borrower and Bank Risk (with Yuliyan Mitkov). Working paper (March 2023), available upon request.

Abstract: We study bank default risk in a model with a competitive banking sector where banks lend to risky borrowers and adjust their interest rates accordingly. Our main result is the following unconventional equilibrium relationship: banks can be more likely to default with less risky borrowers than with more risky borrowers. The reason is that competition may force the bank to lend at excessively low interest rates to less risky borrowers, eroding its capital buffer in case of borrower default and thus increasing its own failure risk. Our analysis explains why this happens and indicates that canonical single-risk factor models used extensively by regulators are too restrictive and may be misleading as regards the relationship between borrower and bank risk.

Unequal and Unstable: Income Inequality and Bank Risk (with Yuliyan Mitkov). EEA annual meeting 2020 conference paper, AEA 2021 annual meeting conference paper (poster session), Bonn/ Mannheim CRCTR224 Working paper No. 261 (January 2021), PDF.

Abstract: We document that the dispersion of failure risk across banks within a given region in the U.S. is greater in regions that have higher income inequality. We explain this pattern with a model based on risk shifting incentives where banks issue insured deposits and choose the riskiness of their portfolios. In equilibrium: (i) some banks endogenously specialize in safe lending, while others engage in risk shifting and (ii) a competition to risk shift emerges whereby loans to subprime borrowers carry negative NPVs. The dispersion of bank risk generated by this sorting is magnified in more unequal regions with greater subprime credit segments.

What drives banks' geographic expansion? The role of locally non-diversifiably risk (with Reint Gropp and Felix Noth). AFA annual meeting 2016 conference paper, Research Center SAFE working paper No. 246 (August 2019), PDF.

Abstract: We show that banks that are facing relatively high locally non-diversifiable risks in their home region expand more across states than banks that do not face such risks following branching deregulation in the United States during the 1990s and 2000s. Further, our evidence shows that these banks take into account the local risks in potential target regions: they expand more into counties where risks are relatively high and positively correlated with risks in their home region. This suggests that these banks do not only diversify but also build on their expertise in local risks when they expand into new regions.

What Drives the Sovereign-Bank Nexus? (with Isabel Schnabel).

Abstract: The positive relationship between bank and sovereign credit risk in the Eurozone, the so-called sovereign-bank nexus, is seen as a major threat for the stability of the Eurozone. This paper explores potential bank-level and country-level drivers of this relationship. We find that banks' home bias in their sovereign exposures and their low equity ratios as well as countries' high debt-to-GDP ratios and low perceived government effectiveness are positively related to the sovereign-bank nexus. While these results do not necessarily reflect causal relationships, they suggest that promoting banks' diversification of sovereign exposures could be an effective measure to mitigate the sovereign-bank nexus.

Selected publications

Natural disasters and bank stability: Evidence from the U.S. financial system (with Felix Noth), 2023, Journal of Environmental Economics and Management 119, forthcoming. Research Center SAFE working paper No. 167 (April 2018; revised February 2023), PDF.

How do banks react to catastrophic events? Evidence from Hurricane Katrina (with Claudia Lambert and Felix Noth), 2019, Review of Finance 23, 75-116. AEA 2012, EFA 2012, FIRS 2012 conference paper, Research Center SAFE working paper No. 94 (September 2017).

Add-On Pricing in Retail Financial Markets and the Fallacies of Consumer Education (with Michael Kosfeld), 2017, Review of Finance 21, 1189-1216. Previous versions are available as AEA 2010 conference paper, Econometric Society World Congress 2010 conference paper, CEPR Discussion Paper No. DP8636, IZA Discussion Paper No. 6061, Research Center SAFE working paper No. 47 (September 2016).

How do insured deposits affect bank risk? Evidence from the 2008 Emergency Economic Stabilization Act (with Claudia Lambert and Felix Noth), 2017, Journal of Financial Intermediation 29, 81-102. Research Center SAFE working paper No. 38 (October 2015).


Further publications and policy papers

Structural Reforms in Banking: The Role of Trading (with Jan-Pieter Krahnen and Felix Noth), 2017, Journal of Financial Regulation 3, 66-88. PDFA previous version is available as SAFE Policy White Paper No. 33. PDF. A summary in German is available as "Ein Verbot wäre wenig zielführend", Bankmagazin (04/2016).

Auswirkung der Einlagensicherung auf das Bankenrisiko (with Claudia Lambert and Felix Noth), 2016, Ökonomenstimme, 17. Feb. 2016.

Funktionen und Einsatz von Finanzderivaten, 2023/2015/2012/2009/2008 (until 2012 with Sascha Steffen), in: Jean-Claude Zerey (Hrsg.), Finanzderivate, Baden-Baden: Nomos, p. 43-67.

Regulatory forbearance and the role of financial reporting transparency during a bank crisis (with Olaf Clemens), 2014, Credit and Capital Markets (previously Kredit und Kapital), volume 47, issue 1, pp. 49-77, PDF.

Germany: The persistence of the three pillar banking system (with Dilek Bülbül and Reinhard H. Schmidt), 2014, in: Butzbach and von Mettenheim (Eds.), Alternative Banking and Financial Crisis, London: Pickering & Chatto Publishers (now Routledge).

Caisses D’Épargne et Banques Coopératives en Europe (with Dilek Bülbül and Reinhard H. Schmidt), 2013, Revue d’Économie Financière, No. 111, pp. 159-187. Also available in English as “Savings Banks and Cooperative Banks in Europe”, Goethe-University SAFE White Paper Series No. 5 (August 2013). Shorter versions are available in German as „Vielfalt im Bankenwesen bewahren“, Bankmagazin (Dezember 2013) and in English as „Savings Banks and Cooperative Banks in European Banking Systems“, SAFE BANK (2013), published by the Polish Bank Guarantee Fund, pp. 38-49. French publication, PDF (english version).

New projects

Monetary Policy and Bank Lending: A Natural Experiment from the US Mortgage Market (with Carlo Wix).

Banking Crisis and Corporate Innovation.



Selected Conferences and Presentations


American Economic Association annual meeting (poster session)*


Bank of Canada research seminar*, Swiss Society for Financial Market Research annual meeting (cancelled) #, International Banking, Economics, and Finance Association (IBEFA) summer meeting*, European Economic Association annual meeting*, Verein für Socialpolitik annual meeting*


Bank of England


TU Munich*, University of Georgia*, University of Bonn #, IWH Halle #, NHH Bergen


Kolloquium Recht und Ökonomie, University of Bonn; VHB annual meeting, St. Gallen; Verein für Socialpolitik, Wien


American Finance Association Annual Meeting, San Francisco; Workshop in Financial Economics, Bonn; Verein für Socialpolitik, Augsburg


European Economic Association Annual Meeting, Mannheim; IWH-FIN-FIRE workshop, Halle


Bundesbank/DIW/ESMT/CfS conference on Achieving Sustainable Financial Stability*, Berlin; CEPR conference on Financial Stability and Regulation*, Barcelona; Research Workshop in Financial Economics, Mainz


FIRS Annual Meeting, Dubrovnik; European Finance Association Annual Meeting, Cambridge


American Economic Association Annual Meeting, Chicago; CEPR Winter Conference on Financial Intermediation, Lenzerheide; FIRS Annual Meeting, Minneapolis; European Finance Association*, Copenhagen


American Economic Association Annual Meeting, Atlanta; Econometric Society World Congress, Shanghai; German Finance Association, Hamburg; German Economic Association (Verein für Socialpolitik), Kiel


Eastern Finance Association Annual Meeting, Washington; German Economic Association (Verein für Socialpolitik), Magdeburg


CEPR/ ECGTN Summer School on Corporate Governance, Santander; European Financial Management Association, Athens; Deutsche Bundesbank research seminar, Frankfurt

* Presentation by a co-author, # Discussant