Edward T. Kim
Working Paper

"The Digital Divide and Refinancing Inequality"

Low-income households derive significantly less savings from mortgage refinancing than their wealthy counterparts. I document that the rise of refinancing inequality in the United States can be partially explained by the gap in access to modern information and communications technology. Using granular spatial variation of a large-scale broadband subsidy program, I show that broadband internet facilitates refinancing activity and reduces monthly mortgage payments. These effects are large and persistent, corresponding to a 5 percent increase in disposable income and up to $18,000 in total savings for low-income households. The growth of refinancing is pronounced in underserved areas with low access to bank branches and among households that are likely to have low financial and digital literacy.


"Deposit Insurance Premiums and Bank Risk" (with Marcelo Rezende)
Review of Corporate Finance Studies, 2023, 12(2): pp. 291-325

Deposit insurance premiums impose costs on banks' balance sheets, narrowing profit margins and inducing banks to "search for yield." This paper estimates the effects of deposit insurance premiums on bank portfolio rebalancing using supervisory data and a kink in the insurance premium schedule. We show that deposit insurance premiums weaken banks' demand for reserves (a liquid asset with no credit risk) and strengthen the supply of short-term interbank loans (a less liquid asset with credit risk). We discuss the implications of these findings for optimal deposit insurance pricing.

"Intangible Value" (with Andrea L. Eisfeldt and Dimitris Papanikolaou)
Critical Finance Review, 2022, 11(2): pp. 299-332
Media coverage: UCLA Anderson Review, VoxEU, Barron's

Intangible assets are absent from traditional measures of value despite their growing importance in firms' capital stocks. We propose a simple improvement to the classic Fama and French (1992, 1993) value factor that incorporates intangibles and addresses differences in accounting practices across industries. Our intangible value factor, HMLINT, prices assets as well as or better than the traditional value factor but yields substantially higher returns. This outperformance holds over the entire sample period, including in more recent decades during which value has underperformed. We show that the intangible value factor sorts more effectively within industries on productivity, profitability, financial soundness, and on other valuation ratios such as price-to-earnings.

"How Have Banks Been Managing the Composition of High-Quality Liquid Assets?"
(with Jane Ihrig, Cindy M. Vojtech, and Gretchen C. Weinbach)
Federal Reserve Bank of St. Louis Review, 2019, 101(3), pp. 177-201

Banks' liquidity management practices are fundamental to understanding the implementation and transmission of monetary policy. Since the Global Financial Crisis of 2007-09, these practices have been shaped importantly by the liquidity coverage ratio requirement. Given the lack of public data on how banks have been meeting this requirement, we construct estimates of U.S. banks' high-quality liquid assets (HQLA) and examine how banks have managed these assets since the crisis. We find that banks have adopted a wide range of HQLA compositions and show that this empirical finding is consistent with a risk-return framework that hinges on banks' aversion to liquidity and interest rate risks. We discuss how various regulations and business model choices can drive HQLA compositions in general, and connect many of the specific compositions we see to banks' own public statements regarding their liquidity strategies. Finally, we highlight how banks' preferences for the share of HQLA met with reserves affect the Fed's monetary policy implementation framework.