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Welcome to my website!

I am a financial economist studying non-bank financial intermediation. My recent work focuses on delegated asset management, financial advice and angel investing.

Publications

[1] “The Globalization of Angel Investments: Evidence Across Countries”
with Josh Lerner, Antoinette Schoar and Karen Wilson
Journal of Financial Economics (2018)

Across 21 countries, angel funding generates a positive impact on firm growth, performance, survival, and follow-on fundraising.

MEDIA: Angel Capital Association

Working Papers

[2] “Paying for Beta: Leverage Demand and Asset Management Fees” (February, 2021)
with Steffen Hitzemann and Mingzhu Tai
Revise and Resubmit, Journal of Financial Economics

We examine how investor demand for leverage shapes asset management fees. We show that in the sample of the U.S. equity mutual funds: (1) fees increase in fund market beta precisely for beta larger than one; (2) this relation becomes stronger and high-beta funds experience larger inflows when leverage constraints tighten; and (3) low net alphas are especially common among high-beta funds. These results are consistent with a model in which asset managers compete for leveraged-constrained investors with heterogeneous risk aversion. The cost of leverage for investors in forms of additional fees equals 46-64 basis points per year. 

PRESENTATIONS: FIRS 2020, NFA 2021

[3] “Regulating Commission-Based Financial Advice: Evidence from a Natural Experiment” (April, 2021)
Revise and Resubmit, Journal of Financial and Quantitative Analysis

Do limitations on commissions paid to financial advisers reduce prices of financial products and stimulate investment? I examine these questions by estimating the causal effects of regulating commissions for mutual fund distribution. I exploit the unique institutional setting in Israel and the 2013 policy change when the government reduced commissions differently for different fund types. The reform led to a major decline in fund expense ratios and a consequent increase in fund flows. Funds with price-sensitive investors experienced a 35% larger inflows. I interpret these results as investor response to price competition fostered by a reduction in distribution costs. 

PRESENTATIONS: SGF Conference 2020, AFA Annual Meeting 2021 

[4] “Does Automation Democratize Asset Management?” (February, 2021)
with Michael Reher

We show that automation affects wealth inequality by giving middle-class households access to asset management. Using novel microdata from a major U.S. automated asset manager (i.e., robo advisor), we study a quasi-natural experiment in which the advisor suddenly reduces its account minimum by 90%. The reduction relaxes investment constraints on middle-class households and increase the number who participate with the advisor by 110%. Consequently, their expected return on liquid wealth rises by 102 pps relative to upper-class households, reflecting a sustained increase in compensated risk. However, automation may not reduce overall wealth inequality, as the reduction does not affect lower-class households.

PRESENTATIONS: California Corporate Finance Conference 2019, CAFR FinTechWorkshop 2020, NY Fed Fintech Conference 2020, The Paris Conference on FinTech and Cryptofinance 2020, Toronto Fintech Conference 2020, Georgetown Fintech Seminar Series 2020

[5] “Strategic Borrowing from Passive Investors: Implications for Security Lending and Price Efficiency” (May, 2021)
with Darius Palia

We examine the effects of passive investing on security lending outcomes and price efficiency for the 2007-2017 period. These findings cannot be fully explained by the standard lending supply channel. While all institutional investors contribute to lending supply, only passive ownership improves price efficiency. Additionally, increased passive ownership correlates with higher lending fees and higher short interest. We propose a complementary, demand-based strategic borrowing channel wherein short-sellers prefer to borrow from passive investors to reduce dynamic short-selling risks. Consistent with our hypotheses, increased passive ownership is associated with lower fee, recall, and information leakage risks, and longer loan duration.

MEDIA: ETF.com
PRESENTATIONS: NYU Stern, UNC Kenan-Flagler, USC Marshall, IDC Summer Finance Conference 2019, Triple Crown Conference 2019, The CUHK International Finance Conference 2019, University of Oklahoma,  Washington University in St. Louis, University of Miami

[6] “What Does Compensation of Portfolio Managers Tell Us About Mutual Fund Industry? Evidence from Israeli Tax Records”
with Galit Ben Naim

The portfolio manager compensation is influenced by fund flows driven by past raw returns. Managers are thus paid equally for fund superior performance and for the fund’s passive benchmark returns. 

MEDIA:Bloomberg
PRESENTATIONS: AFA Annual Meeting 2018, Darden School of Business, Boston Fed, AQR Capital Management, Hebrew University