The Journal of Finance

Increasing Enrollment in Income‐Driven Student Loan Repayment Plans: Evidence from the Navient Field Experiment

Published: 11/13/2021,  Volume: 77,  Issue: 1  |  DOI: 10.1111/jofi.13088  |  Cited by: 44

HOLGER MUELLER, CONSTANTINE YANNELIS

We report evidence from a randomized field experiment conducted by a major student loan servicer, Navient, in which student loan borrowers received prepopulated applications for income‐driven repayment (IDR) plans. Treatment increased IDR enrollment by 34 percentage points relative to the control group. Using the random treatment assignment as an instrument for IDR enrollment, we furthermore provide local average treatment effect (LATE) estimates of the effects of IDR enrollment on new delinquencies, monthly student loan payments, and consumer spending. Our study is the first field‐experimental evaluation of a U.S. government program designed to address the soaring debt burdens of U.S. households.

Capital and Labor Reallocation within Firms

Published: 7/23/2015,  Volume: 70,  Issue: 4  |  DOI: 10.1111/jofi.12254  |  Cited by: 236

XAVIER GIROUD, HOLGER M. MUELLER

We document how a positive shock to investment opportunities at one plant (“treated plant”) spills over to other plants within the same firm, but only if the firm is financially constrained. To provide the treated plant with resources, the firm's headquarters withdraws capital and labor from other plants, especially plants that are relatively less productive, not part of the firm's core industries, and located far away from headquarters. As a result of the resource reallocation, aggregate firm‐wide productivity increases. We do not find evidence of capital or labor spillovers among plants of financially unconstrained firms.

Corporate Governance, Product Market Competition, and Equity Prices

Published: 3/21/2011,  Volume: 66,  Issue: 2  |  DOI: 10.1111/j.1540-6261.2010.01642.x  |  Cited by: 1019

XAVIER GIROUD, HOLGER M. MUELLER

This paper examines whether firms in noncompetitive industries benefit more from good governance than do firms in competitive industries. We find that weak governance firms have lower equity returns, worse operating performance, and lower firm value, but only in noncompetitive industries. When exploring the causes of the inefficiency, we find that weak governance firms have lower labor productivity and higher input costs, and make more value‐destroying acquisitions, but, again, only in noncompetitive industries. We also find that weak governance firms in noncompetitive industries are more likely to be targeted by activist hedge funds, suggesting that investors take actions to mitigate the inefficiency.

Informed Lending and Security Design

Published: 9/19/2006,  Volume: 61,  Issue: 5  |  DOI: 10.1111/j.1540-6261.2006.01053.x  |  Cited by: 61

ROMAN INDERST, HOLGER M. MUELLER

We examine the role of security design when lenders make inefficient accept or reject decisions after screening projects. Lenders may be either “too conservative,” in which case they reject positive‐NPV projects, or “too aggressive,” in which case they accept negative‐NPV projects. In the first case, the uniquely optimal security is debt. In the second case, it is levered equity. In equilibrium, profitable projects that are relatively likely to break even are financed with debt, while less profitable projects are financed with equity. Highly profitable projects are financed by uninformed arm's‐length lenders.

Legal Investor Protection and Takeovers

Published: 5/8/2014,  Volume: 69,  Issue: 3  |  DOI: 10.1111/jofi.12142  |  Cited by: 37

MIKE BURKART, DENIS GROMB, HOLGER M. MUELLER, FAUSTO PANUNZI

This paper examines the role of legal investor protection for the efficiency of the market for corporate control when bidders are financially constrained. In the model, stronger legal investor protection increases bidders' outside funding capacity. However, absent effective bidding competition, this does not improve efficiency, as the bid price, and thus bidders' need for funds, increases one‐for‐one with the pledgeable income. In contrast, under effective competition for the target, the increased outside funding capacity improves efficiency by making it less likely that more efficient but less wealthy bidders are outbid by less efficient but wealthier rivals.

THE TREASURY‐FEDERAL RESERVE ACCORD

Published: 12/1952,  Volume: 7,  Issue: 4  |  DOI: 10.1111/j.1540-6261.1952.tb02484.x  |  Cited by: 1

F. W. Mueller

MONEY, INVESTMENT, AND ECONOMIC DEVELOPMENT WITH SPECIAL REFERENCE TO INDIA*

Published: 12/1960,  Volume: 15,  Issue: 4  |  DOI: 10.1111/j.1540-6261.1960.tb02778.x  |  Cited by: 0

M. B. Mueller

MIXED BANKING AND ECONOMIC GROWTH: THE GERMAN CASE*

Published: 9/1963,  Volume: 18,  Issue: 3  |  DOI: 10.1111/j.1540-6261.1963.tb02856.x  |  Cited by: 0

Holger L. Engberg

THE SAVINGS ACCOUNT AS A SOURCE FOR FINANCING LARGE EXPENDITURES*

Published: 9/1967,  Volume: 22,  Issue: 3  |  DOI: 10.1111/j.1540-6261.1967.tb02974.x  |  Cited by: 2

Eva Mueller, Jane Lean

Internal versus External Financing: An Optimal Contracting Approach*

Published: 5/6/2003,  Volume: 58,  Issue: 3  |  DOI: 10.1111/1540-6261.00557  |  Cited by: 86

Roman Inderst, Holger M. Müller

AbstractWe study optimal financial contracting for centralized and decentralized firms. Under centralized contracting, headquarters raises funds on behalf of multiple projects. Under decentralized contracting, each project raises funds separately on the external capital market. The benefit of centralization is that headquarters can use excess liquidity from high cash‐flow projects to buy continuation rights for low cash‐flow projects. The cost is that headquarters may pool cash flows from several projects and self‐finance follow‐up investments without having to return to the capital market. Absent any capital market discipline, it is more difficult to force headquarters to make repayments, which tightens financing constraints ex ante. Cross‐sectionally, our model implies that conglomerates should have a lower average productivity than stand‐alone firms.

Foreign Exchange Fixings and Returns around the Clock

Published: 1/25/2024,  Volume: 79,  Issue: 1  |  DOI: 10.1111/jofi.13306  |  Cited by: 19

INGOMAR KROHN, PHILIPPE MUELLER, PAUL WHELAN

The U.S. dollar appreciates in the run‐up to foreign exchange (FX) fixes and depreciates thereafter, tracing a W‐shaped return pattern around the clock. Return reversals for the top nine traded currencies over a 21‐year period are pervasive and highly statistically significant, and they imply daily swings of more than one billion U.S. dollars based on spot volumes. Using natural experiments, we document the existence of a published reference rate determines the timing of intraday return reversals. We present evidence consistent with an inventory risk explanation whereby FX dealers intermediate unconditional demand for U.S. dollars at the fixes.

Exchange Rates and Monetary Policy Uncertainty

Published: 4/13/2017,  Volume: 72,  Issue: 3  |  DOI: 10.1111/jofi.12499  |  Cited by: 217

PHILIPPE MUELLER, ALIREZA TAHBAZ‐SALEHI, ANDREA VEDOLIN

We document that a trading strategy that is short the U.S. dollar and long other currencies exhibits significantly larger excess returns on days with scheduled Federal Open Market Committee (FOMC) announcements. We show that these excess returns (i) are higher for currencies with higher interest rate differentials vis‐à‐vis the United States, (ii) increase with uncertainty about monetary policy, and (iii) increase further when the Federal Reserve adopts a policy of monetary easing. We interpret these excess returns as compensation for monetary policy uncertainty within a parsimonious model of constrained financiers who intermediate global demand for currencies.