Twin Defaults and Bank Capital Requirements
Version of Record online: 6/25/2026 | DOI: 10.1111/jofi.70058
CATERINA MENDICINO, KALIN NIKOLOV, JUAN RUBIO‐RAMIREZ, JAVIER SUAREZ, DOMINIK SUPERA
We examine optimal capital requirements in a quantitative general equilibrium model with banks exposed to nondiversifiable borrower default risk. Contrary to standard models of bank default risk, our framework captures the limited upside, but significant downside risk of loan portfolio returns. This helps to reproduce the frequency and severity of
Learning to Navigate a New Financial Technology
Version of Record online: 6/17/2026 | DOI: 10.1111/jofi.70062
EMILY BREZA, MARTIN KANZ, LEORA KLAPPER
We present results from a field experiment that introduced digital payroll accounts to unbanked factory workers to examine how inexperienced consumers learn to use a new financial technology. We find that exposure to payroll accounts leads to increased account use, accelerated learning, and avoidance of common consumer protection risks. Those receiving electronic wage payments gradually build trust in the technology, learn to use accounts without assistance, and avoid illicit fees. Using experimental variation in assignment to bank versus mobile money accounts, we show that these impacts are concentrated in mobile money accounts, the newer, more complex, and less trusted financial technology.
The Equilibrium Effects of Eviction Policies
Version of Record online: 5/11/2026 | DOI: 10.1111/jofi.70046
BOAZ ABRAMSON
I propose a dynamic equilibrium model of rental markets that endogenously gives rise to defaults on rents and evictions. In the model, eviction protections make it harder to evict delinquent renters, but higher default costs to landlords increase equilibrium rents. I quantify the model using micro data on evictions, rents, and homelessness. I find that stronger eviction protections exacerbate housing insecurity and lower welfare. The key empirical driver of this result is the persistent nature of risk underlying rent delinquencies. Rental assistance reduces housing insecurity and improves welfare because it lowers the likelihood that renters default ex ante.
Learning in the Limit: Income Inference from Credit Extensions
Version of Record online: 5/7/2026 | DOI: 10.1111/jofi.70040
XIAO YIN
Combining a randomized controlled trial with administrative and survey data, this paper shows that credit limit extensions significantly increase total spending and income expectations. By controlling for changes in personal income expectations, the spending response to credit limit extensions weakens by approximately 30%. For financially unconstrained consumers, expectation changes account for around two‐thirds of the spending responses to limit extensions. These findings are consistent with consumers inferring future income from credit supply.