Erica Jiang's research focuses on financial intermediation, household finance, and financial regulation. Her recent work studies the distributional effects of the credit supply-side adjustments in response to the rise of shadow banks, digital disruption, and changing regulatory environment.
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INSIGHT + ANALYSIS
Cited: Erica Jiang in New York Times
The New York Times cites research by JIANG, assistant professor of finance and business economics, indicating that mounting commercial real estate losses — 14 percent of all commercial real estate loans and 44 percent of office loans are underwater — could spell trouble for banks.
Interview: Erica Jiang on Yahoo Finance
JIANG, assistant professor of finance and business economics, spoke extensively with Yahoo Finance on the worrying state of real estate loan defaults.
Cited: Erica Jiang in Commercial Observer
The Commercial Observer cites recent research co-authored by JIANG finds that more than 14% of all commercial real estate loans and 44% of office loans are at risk of immediate default.
NEWS + EVENTS
Marshall Faculty Publications, Awards, and Honors: May 2024 and Year-End Recognitions
We are thrilled to congratulate Marshall’s exceptional faculty recognized for recently accepted and published research, 2023–2024 awards, and other accolades.
For a complete list of Golden Apple and Golden Compass Awards, voted on by students, please visit HERE.
For a complete list of Faculty and Staff Awards, please visit HERE.
A Q&A with Erica Jiang on the Newest Real Estate Crisis
Banks and building owners are in a moment of turmoil. What can be done?
Marshall Faculty Publications, Awards, and Honors: February 2024
We extend our congratulations to Marshall’s esteemed faculty for their recently accepted and published research and awards.
Research: Relevant Research at the Right Time
Marshall Assistant Professor Erica Jiang’s Research on Bank Stability Found Highly Relevant in the Wake of SVB’s demise.
Tommy Talks: Unveil the Funding of Shadow Banks
In this month’s Tommy Talk, Prof. Jiang sheds some light on the shadow banking system which currently originates more than 50% of new mortgage loans in the U.S. She talks about their funding sources, how shadow banks' financing affects their competition with banks, and their role during the pandemic.
RESEARCH + PUBLICATIONS
We study the suspension of household debt payments (debt forbearance) during the COVID-19 pandemic. Between March 2020 and May 2021, more than 70 million consumers with loans worth $2.3 trillion entered forbearance, missing $86 billion of their payments. This debt relief can help explain the absence of consumer defaults relative to the evolution of economic fundamentals. Borrowers’ self-selection is a powerful force in determining forbearance rates: relief flows to households suffering pandemic induced shocks who would have otherwise faced debt distress. Moreover, 55% of forbearance is provided to less creditworthy borrowers with above median income and higher debt balances – i.e., those excluded from income-based policies, such as the stimulus check program. A fifth of borrowers in forbearance continued making full payments, suggesting that forbearance acts as a credit line. About 60% of borrowers already exited forbearance while more financially vulnerable and lower income borrowers are still in forbearance with an accumulated debt overhang of about $60 billion Exploiting a discontinuity in mortgage eligibility under the CARES Act we estimate that implicit government debt relief subsidies increase the rate of forbearance by about a third. Government relief is provided through private intermediaries, with shadow banks less likely to provide forbearance than traditional banks.
Shadow banks service a substantial portion of household debt in the US including half of residential mortgages. They also funded and implemented a large portion of the CARES Act driven debt relief. Despite uniform policy and similar borrowers, shadow banks offered debt forbearance at significantly lower (27%) rate compared to traditional banks. Better capitalized shadow banks offered forbearance at a much higher rate and those with larger exposure to servicing related liquidity shocks reduced this exposure by selling their servicing rights. We highlight fragility of shadow bank servicing during downturns that can impede the pass-through of debt relief to households.
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