Research

Working Papers

Pulling the Plug: Retail Traders and Social Media

Draft

Abstract: This paper uses days on which social media platform connectivity is exogenously interrupted to study social media’s impact on retail trading. It provides evidence consistent with social media platforms spreading fanatical optimism rather than rational beliefs. On “outage” days, social media-discussed stocks experience an increase in retail trading volume concentrated in selling during the first 2 hours of the outage. Social media-discussed stocks experience a price decline that reverses over the next day following the outage. These results can be explained by a theoretical model of fanatical optimism and are robust to a battery of alternative explanations. The paper’s findings highlight the important role of social media on retail traders’ belief formation and its stock market consequences.

Presented at Midwestern Finance Association Ph.D. Symposium, Southwestern Finance Association Annual Meeting, Eastern Finance Association Annual Meeting, Financial Management Association Annual Meeting, University of Illinois at Urbana-Champaign, University of South Florida, Economics of Financial Technology Conference, Southern Finance Association Annual Meeting, Latin American and Caribbean Economic Association (LACEA)

House of Stolen Cards: Credit Outcomes after Lost/Stolen Credit Cards

with Divij Kohli — Draft

Abstract: Research on payment security and credit card fraud has been constrained by data limitations. Exploiting a quirk of credit reporting, we identify credit cards exposed to fraud in credit bureau data. Using a matched-sample difference-in-differences approach, we find that lenders restricted credit supply to individuals exposed to fraud, while consumer demand for credit leveled off post-fraud. We then study the impact of a sudden U.S. government initiative promoting the adoption of more secure chip-enabled cards. Following this intervention, lenders ceased restricting credit supply to fraud exposed consumers. However, despite enhanced payment security, consumers continue to reduce their credit demand after fraud exposure. Our findings suggest that improved payment security mitigates fraud risks for lenders, but persistent consumer distrust about payment security underscores the need for further policy innovations, such as one-time passcodes for credit card transactions.

Presented at Financial Management Association Annual Meeting, University of Illinois at Urbana-Champaign (coauthor)

Works in Progress

The Value of Truth in Social Media: Retail Traders and Reddit Ban Bets

with Corbin Fox

The Other Half: Monetary Policy Transmission for Households without Mortgages

with Yucheng Zhou and Divij Kohli

Presented at Financial Management Association Early Ideas (coauthor)