Who Invests in Crypto? Wealth, Financial Constraints, and Risk Attitudes
Who are the crypto investors, really? From a regulatory perspective, this study challenges some common misconceptions. It’s easy for regulators to pursue a heavy-handed approach if they assume crypto investors are mostly niche groups like Reddit traders or libertarian ideologues. However, our research, using detailed transaction-level data, shows that most crypto investors closely resemble traditional investors. Over 80% of crypto investors in our study also hold positions in traditional assets like stocks, and many of them have higher incomes and are financially sophisticated.
Impact of Retail CBDC on Digital Payments, and Bank Deposits: Evidence from India
My recent study on the impact of CBDC on bank deposits, in partnership with India's Central Bank):
- The digital Rupee is challenging the popular UPI (Unified Payments Interface). When UPI faced a new tax, digital Rupee usage surged, particularly among higher-income and more educated users.
- As more people started using the digital Rupee, traditional bank deposits began to decline.
Even though the digital Rupee doesn’t offer interest, we saw a shift in deposits away from traditional banks. This trend raises concerns about the future role of banks in attracting deposits.
The Effects of Cryptocurrency Wealth on Household Consumption and Investment
​How do changes in crypto wealth impact how people spend and invest? Using bank and credit card data, our study uncovers that crypto gains significantly boost household spending—especially on discretionary purchases and housing. Interestingly, crypto investors behave a lot like equity investors, but when crypto values rise, they’re more likely to cash out for bigger lifestyle upgrades, even driving up local house prices. This insight sheds light on the broader effects of cryptocurrency on household behavior and the economy.
"The Pass-Through of Uncertainty Shocks to Households." Journal of Financial Economics 145, no. 1 (July 2022): 85–104.
​How does economic uncertainty impact workers and their spending? Our research, using new data that links employers and employees, reveals that when firms face uncertainty—like fluctuations in their stock prices—workers feel it too. Companies tend to cut variable pay, which reduces overall compensation. As a result, individuals, especially those with lower incomes, spend less on big purchases and become more financially vulnerable. We even see these effects ripple out to the community level, with local economies experiencing drops in spending on durable goods. This insight highlights the real-life impacts of economic uncertainty on workers and their communities.
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Can AI help more people get fair access to credit?
Can AI help more people get fair access to credit? Using anonymized data from a major fintech platform, our research shows that AI-driven credit models—using alternative data—are far better than traditional methods at assessing borrowers. Compared to the old models used for regulatory purposes, the AI approach results in fewer rejections and better rates for borrowers, especially for the 'invisible primes'—people with low credit scores but a strong likelihood of repayment. By funding these loans, fintech platforms not only support borrowers' economic well-being but also see higher returns, proving the power of AI in transforming credit access.
How does 'Buy Now, Pay Later' (BNPL) change spending habits? Our study reveals that BNPL installment loans can increase total spending, especially for people with tight budgets, by giving them more flexibility to spread out payments. However, it also raises overdraft fees for these consumers. Overall, BNPL access encourages more spending on retail goods, acting like extra liquidity that sticks to retail purchases, rather than being saved or spent elsewhere. These shifts in consumer behavior show that BNPL has a significant impact on short-term spending patterns, beyond what typical economic models would predict.
