Amit Kumar

We arranged for trained undercover men and women to pose as potential clients and visit all 65 local financial advisory firms in Hong Kong. At financial planning firms, but not at securities firms, women were more likely than men to receive advice to buy only individual or only local securities. Female clients who signaled that they were highly confident, highly risk tolerant or had a domestic outlook, were especially likely to receive this suboptimal advice. Our theoretical model explains these patterns as the result of statistical discrimination interacting with advisors’ incentives. Taste-based discrimination is unlikely to explain the results.

Tighter regulations on debt collections, though intended to protect consumers from predatory practices, may disrupt industries to which consumer debts are owed. Using a paired-county stacked difference-in-differences design, we show that hospitals in border counties of states tightening the regulations are adversely affected than those in border counties of neighboring states without such changes. Financial liabilities, bad debt write-offs, and borrowing costs of affected hospitals increase, whereas revenues and profitability fall. They respond by lowering employment, investment, and patient care. Moreover, they curtail charity care for uninsured patients, reducing access to healthcare for a population vulnerable to incurring medical debt.

Hazardous yet previously unmonitored and unregulated, per- and polyfluoroalkyl substances (PFAS) were detected in 2016 in public drinking water systems of 33 U.S. states during the first-ever PFAS testing. A paired-county difference-in-differences design comparing contaminated counties with bordering, same-state uncontaminated counties shows that the contamination discovery raised municipal bond offering yields by 13 basis points. Municipal revenues, taxes, employment, and expenditures declined, while population out-migration increased. Consistent with rising compensating wage differentials, wages in tradable industries rose, but job creation fell, and firm closures increased. Unemployment and self-employment also increased, emphasizing the multifaceted adverse effects of the PFAS contamination discovery.

Seven U.S. states granted consumers easier access to credit report during the 1990s, a policy extended nationwide in 2005. Using this extension in a paired-county difference-in-differences design across state borders, I show that easier access to credit reports improved the mortgage applicant pool, evident in higher approval rates, fewer delinquencies, and fewer applications. Furthermore, credit history-based rejections declined more than debt-to-income ratio-based rejections. A theoretical model with costly applications and rejections explains these effects as resulting from reduced probability of potential borrowers misjudging their creditworthiness and approval probability. Overall, improved access to credit reports for consumers reduces credit market imperfections.