Published Papers:

Screening Using a Menu of Contracts: A Structural Model for Lending Markets   [Slides], with Alberto Polo  and Quynh-Anh Vo 

    Journal of Financial Economics  (2025)   

Abstract:   When lenders screen borrowers using a menu, they generate a contractual externality by making the composition of their competitors’ borrowers worse. Using data from the UK mortgage market and a structural model of screening with endogenous menus, this paper quantifies the impact of asymmetric information on equilibrium contracts and welfare. Counterfactual simulations of a social planner problem show that, because of the externality, there is too much screening along the loan-to-value dimension. The deadweight loss, expressed in borrower utility, is equivalent to an interest rate increase of 30-60 basis points (a 15-30 percent increase) on all loans.

Working papers: 

Screening Using a Menu of Contracts in Imperfectly Competitive Markets with Adverse Selection  [Slides]  

Abstract: I develop a model of screening with menus using a demand system that nests various degrees of competition, from perfect competition to monopoly. I show the existence of a pure strategy Nash equilibrium and characterise it in closed form. I then analyse a contractual externality and build a sufficient statistic to test for its empirical relevance. I also use the model to study credit market policies in the presence of screening. I show that contrary to conventional wisdom, increasing capital requirements, increasing the Federal Reserve rate, or decreasing competition can increase lending.  I provide an empirical application in the context of consumer credit and show that, due to the externality, the menus contain too many maturity options. Model parameters are recovered using a linear regression of prices on quantities controlling for contract market shares.

  The cost and shadow cost of credit, with Simone Lenzu and Francesco Manaresi

Revise and Resubmit, Review of Corporate Finance Studies   

Abstract: Using a novel micro-level dataset on firms' production and financing decisions, we estimate the distribution of firm-specific financial wedges in capital accumulation due to binding borrowing constraints-the shadow cost of credit-and compare these to observed market price of credit-the borrowing rate. We find that shadow costs are significantly higher, more dispersed, and more sensitive to variations in credit risk factors than borrowing rates. Our analysis also reveals a high sensitivity of firms' investment to shadow costs, indicating that credit rationing, rather than elevated borrowing costs, is the primary channel through which credit market frictions distort investment policies and capital allocation, particularly for small and medium enterprises. 

Informal Seniority, [Slides] with Theo Cotrim Martins and Bernardo Ricca

Presented at: NBER Corporate Finance 2026, SITE 2026,  AFA 2026, Philly Fed 2025, MFA 2026, Berkeley Haas, HEC, Sciences Po,  LSE, TSE.

Abstract:   We document that, in a set-up with weak loan contract enforcement, lenders compete for repayment prioritisation (i.e., informal seniority) through continuation values  using credit limits, interest rates, and cross-selling. We show that such competition can lead to either over- or underprovision of relationship benefits, implying that standard bankruptcy policies requiring equal recovery across lenders may lower welfare. In the credit card market, our sufficient-statistic approach implies that credit limits one year after origination are 7 percent below the first best and would fall by an additional 2.5 percent under equal recovery.

Competition and Synergies Across Loan Products, with Carlos Burga and  Alessandro Tomarchio

Abstract:  We study demand and cost synergies between credit cards and term loans in the small business loan market. We use data on the universe of small-firm and self-employed borrowers and exploit a 2023 reform in Peru allowing eligible municipal banks (i.e., Cajas) to issue credit cards. Firms more exposed to eligible lenders obtain more cards (5 pp), but also more business term credit (10 pp), primarily from competing banks. Term-loan rates rise at Cajas and fall at banks (5pp spread increase), while defaults shift across lenders (5pp increase at banks and 7pp decrease at Cajas). The shift in defaults comes from borrowers with two relationships selectively defaulting more on banks than on Cajas.  We develop a structural framework to separate the effects of current competition, future relationship rents, and repayment incentives on contract terms and welfare.

Work in progress: 

Informal Seniority: Evidence from a Randomised Controlled Experiment, with Bernardo Ricca (contract signed with a private institution)