Carlos Parra

Assistant Professor of Finance

 Pontifical Catholic University of Chile (PUC-Chile) 

School of Management



Curriculum Vitae


Contact Information

Avenida Vicuña Mackenna 4860
Macul 7820436
Santiago, Chile

E-mail: parra.c.carlos.r@gmail.com


​​​​​​​​​​​​​​​​​Research Interests

My research interests are in the interaction of Household Finance, Financial Intermediation, Real Estate, and Entrepreneurship.


Working Papers


The Effect of Principal Reduction on Household Distress: Evidence from Mortgage Cramdown (with Jacelly Cespedes and Clemens Sialm) (R&R at the Review of Financial Studies)
Media Coverage:​ Columbia Law School’s Blue Sky Blog
Funded by NBER-HF Small Grants Program

  • Selected Presentations: Virtual Real Estate Seminar, CEPR Workshop on Household Finance, New York Fed / NYU Stern Conference on Financial Intermediation

Mortgage cramdown enabled bankruptcy judges to discharge the underwater portion of a mortgage during Chapter 13 bankruptcy before the Supreme Court disallowed this practice in 1993. We exploit the random assignment of cases to judges to quantify the ex-post effects of Chapter 13 bankruptcy over the period from 1989 to 1993. We find that a successful Chapter 13 filing in a cramdown court substantially decreases the five-year foreclosure rate, the propensity to move, and the crime rate. Our results suggest that principal write-down considerably reduces homeowner's distress.


More Money, More Options? The Effect of Cash Windfalls on Entrepreneurial Activities in Small Businesses (with Jacelly Cespedes and Xing Huang) (R&R at the Review of Financial Studies)
Selected Presentations: NBER SI Entrepreneurship, Northeastern Finance Conference, NYU Conference on Household Finance
Using a novel setting in which retailers receive bonuses when selling jackpot winning lottery tickets, we show that large windfalls not only increase the revenue and employment of existing businesses but also spur serial entrepreneurship. Serial ventures occur mainly in nonretail industries. We document a pecking order in entrepreneurs' responses: small windfalls increase revenue, whereas windfalls larger than $100,000 trigger business creation and employment growth. Consistent with wealth effects as an indispensable mechanism, the effects become larger still when cash windfalls far surpass the amount required to start new businesses. Finally, cash windfalls do not lead to financial distress.


Strategically Staying Small: Regulatory Avoidance and the CRA  (with Jacelly Cespedes and Jordan Nickerson)

Media Coverage:​ Columbia Law School’s Blue Sky Blog

​The 1995 CRA reform led to a two-tiered evaluation scheme determined by a bank's asset value. Using this feature, we examine the consequences of regulatory avoidance in the context of the CRA. Banks exploit the attribute-based regulation by strategically slowing asset growth, bunching below the $250M threshold. Exploiting the introduction of the asset threshold, we find that regulatory avoidance also has real effects. Banks near the threshold prior to the 1995 reform experience an increase in the rejection rate of LMI loans, while areas they serve experience a decline in the county-level share of small establishments and independent innovation. Taken together, these results highlight a bank’s willingness to take costly actions to avoid increased regulatory oversight, and as a consequence, reduced credit access for individuals the CRA is designed to benefit.


Capital Mobility and Regulation Frictions: Evidence from U.S. Lottery Winners
Media Coverage: Fox BusinessNational AffairsDawn

  • Selected Presentations: FRA, FIRS, ISB Summer Research Conference

Despite the banking deregulation that lifted restrictions on bank expansion across state lines, I find that state borders are still relevant for credit allocation in the United States. Using a new source of quasi-experimental variation in bank funding from lottery winners, I show that small business lending mostly increases in the state where the shock occurs. Results are not explained by local demand or bank charter type and are robust to comparing contiguous CBSA pairs across state borders. Consistent with part of the banking regulation reducing capital mobility, the effects are more pronounced for banks for which the regulation binds.


How Does Consumer Bankruptcy Protection Impact Household Outcomes?

2015 PhD Outstanding Paper Award, Olin - Washington University in St. Louis
  • Selected Presentations: WFA, ASSA-AREUEA

Chapter 7 bankruptcy, the main debt relief program for U.S. households, provides more than $150 billion in debt relief each year, yet its impact on consumers remains unclear. Using unique hand-collected data from individual bankruptcy petitions, I employ a regression discontinuity design to estimate Chapter 7’s effect on households’ subsequent real investment and financial performance. Chapter 7 protection increases the probability of a debtor creating a new business, becoming a first-time homeowner, and avoiding home foreclosure. Although Chapter 7 protects people in a variety of ways—for example, by stopping creditor harassment—the above findings arise because of debt relief.


Almost Famous: The Short- and Long-Term Effects of Housing Wealth Shocks on Career Decision (with Jacelly Cespedes and Zack Liu)

Media Coverage: National Affairs

  • Selected Presentations: Finance in the Cloud, UTD Finance Conference, European Meeting of the Labor and Finance Group, CEPR Household Finance Seminar Series

Using a novel data set of career histories in the film industry, we study the effect of housing wealth shocks on the quality of jobs that individuals pursue. Homeowners facing greater declines in local house prices reduce their participation in high-quality projects, such as big-budget films and productions with award-winning talent, while increasing their involvement in low-quality films. Importantly, renters are not affected by these shocks. Consistent with individuals using home equity during job searches, these negative shocks have a greater impact on homeowners with lower equity and on those who extracted home equity before the Great Recession. Moreover, house price declines from the housing crisis also affect long-term career outcomes.


​​​Peer Effects Across Firms: Evidence from Security Analysts (with Jacelly Cespedes)

  • ​Selected Presentations: SOLE

We assess the magnitude and mechanisms of workers’ productivity spillovers by estimating the peer effects among those working in the same occupation across firms using the setting of security analysts. The empirical design exploits one feature of social networks: the existence of partially overlapping peer groups. This refers to analysts who cover similar industries but not exactly the same group of industries, which generates peers of peers (excluded peers). This allows the identification of both peer characteristics and peer outcome effects. In addition, to deal with common group shocks, the exogenous characteristics of excluded peers are used as instruments. We find strong evidence of spillovers in terms of peer outcomes and characteristics. In particular, peer accuracy is positively related to analyst accuracy, while the number of industries followed by analysts' peers negatively impacts accuracy. In terms of the potential mechanisms that account for the spillover effects, we find that the effects are stronger when analysts see their peers performing well and that besides imitation, knowledge spillovers also help explain the results.


Selected Work in Progress

​​​Small Business Boundaries

Funded by NBER-HF Small Grants Program

Carlos Parra McCombs