Alessandro Di Stefano

Payment fintechs, acting as lenders, possess a potential solution to weak debt enforcement because of their ability to deduct a part of a merchant’s digital sales towards loan repayment. Analyzing payments processed by an Indian fintech company offering sales-linked loans, we find that some borrowers discontinuously reduce sales flowing through the company immediately after the loan disbursal to circumvent repayment and strategically default. Using credit bureau scores sourced independently and the spatial and temporal heterogeneity in cash availability generated by a cash-crunch episode, we find that competition from other lenders and cash limits the effectiveness of this enforcement technology

Effective market discipline hinges on bondholders' belief that regulators will impose losses instead of resorting to bailouts. The unprecedented write-down of Credit Suisse's Additional Tier 1 (AT1) bonds in March 2023 provides a unique empirical setting to test how regulatory credibility affects investor discipline. Using comprehensive global bond market data covering the 250 largest banks across 48 jurisdictions, we find that investors repriced AT1 bonds systematically after the Credit Suisse event, differentiating strongly based on bank-specific risks and profitability rather than indiscriminately reacting in panic. Furthermore, investors' responses to earnings announcements significantly intensified post-event, with AT1 bond yields becoming roughly 64 percent more sensitive to bank-specific financial disclosures—a heightened sensitivity persisting for months. Planned extensions of this analysis will pinpoint precisely which institutional investors adjusted their portfolios most actively, examine banks' strategic responses to intensified investor scrutiny, and explore how disclosure quality influences investor vigilance, providing clear, practical insights for risk management and policy decisions.