Research

Working Papers

“When Prejudice Hits Home: Hate Crime and the Market for Mortgage Credit” (with Iftekhar Hasan, Sizhe Hong and Dennis Philip)
This version: June 2024
[SSRN]

Abstract Hate-motivated crimes have risen to unprecedented levels, yet their far-reaching economic consequences remain understudied. Utilizing comprehensive data on US mortgage applications and county-level hate crime statistics, we document significant effects on housing decisions. An increase in anti-minority racial hate crimes reduces mortgage applications, with both minority and White applicants exhibiting strong demand-side responses. We find that residents migrate away from hate crime-affected counties rather than delaying home purchases or entering the rental market. These patterns speak to an erosion of social cohesion in impacted neighborhoods. Supporting this, survey evidence shows elevated psychological distress levels and reduced visible consumption in affected counties, as well as a diminished presence of civic organizations. Our findings illuminate the far-reaching consequences of hate crimes on housing choice with consequences for the economic development of entire neighborhoods.
BibTeX @article{EHHP2024,
  title={When Prejudice Hits Home: Hate Crime and the Market for Mortgage Credit},
  author={Christian Engels and Iftekhar Hasan and Sizhe Hong and Dennis Philip},
  year={2024},
}
  • Winner: Best Paper Award in Memory of Phil Molyneux, Finest 2023 Autumn Workshop

Early Roots of Inequality: Evidence of a Gender Income Gap Among Children (with Ray Charles “Chuck” Howard, Marcel Lukas and Dennis Philip)
This version: June 2024
[SSRN]

Abstract The gender pay gap among adults is well documented. This article uncovers an analogous gender income gap between girls and boys aged 6 to 15, where 'income' is defined as the amount of money children receive from their parents. Our analysis is based on large-scale, longitudinal data by a financial service provider that parents use to transfer money to their children. The data reveal that the gender income gap exists as early as age 6, when girls receive 6.36% less income than boys. The gap then grows throughout childhood (age 6 to 10), before diminishing and eventually reversing in adolescence (age 11 to 15). However, the data also show that (a) it takes almost a decade for girls to reach cumulative income parity with boys, despite girls completing more household tasks, and (b) the income gap in childhood means that girls never catch up with boys in terms of savings capacity, even after achieving income parity as teenagers. These early life disparities are notable because they indicate that girls have less opportunity to learn money management skills, and because they foreshadow many of the financial gender gaps that exist in adulthood.
BibTeX @article{EHLP2024,
  title={Early Roots of Inequality: Evidence of a Gender Income Gap Among Children},
  author={Christian Engels and Ray Charles "Chuck" Howard and Marcel Lukas and Dennis Philip},
  year={2024},
}

The Cost of Privacy Failures: Evidence from Bank Depositors’ Reactions to Breaches (with Bill Francis and Dennis Philip)
This version: June 2022
[SSRN]

Abstract We study consumers’ reactions in response to material privacy violations. Exploring privacy breach incidences of U.S. banks, where personally identifiable information (social security numbers, addresses, names) is exposed to unauthorized parties, we find that depositors reallocate significant wealth holdings away from breached banks – we note a 12% differential in total deposits growth between breached and control banks in the year following a breach of privacy. In response to the depletion in deposits, breached banks increase deposit rates just after breach incidences and draw on funding liquidity from the interbank market. The results highlight the importance of privacy for consumers.
BibTeX @article{EFP2022,
  title={The Cost of Privacy Failures: Evidence from Bank Depositors' Reactions to Breaches},
  author={Christian Engels and Bill Francis and Dennis Philip},
  year={2022},
}

Publications

When It Rains It Drains: Psychological Distress and Household Net Worth (with Adnan Balloch and Dennis Philip)
Journal of Banking and Finance, Volume 143, October 2022, 106620.
[SSRN]

Abstract This paper establishes a sizeable negative effect of poor mental health on individuals' net worth. In a representative panel of U.S. households, we find that a one standard deviation (or four unit) increase in Kessler's K6 psychological distress level decreases net worth by 13.2 percent and increases by 5 percent the baseline risk of being in deficit net worth, where levels of debt outstrip the value of assets. Survival analyses further show that psychological distress accelerates the entry into and prolongs the stay in deficit net worth states, as well as increasing the probability of re-entry into deficit. Using a Blinder-Oaxaca decomposition, we find that differences in level of savings, medical debt and labor income predominantly explain the lower net worth and higher likelihood of deficit net worth of individuals with high psychological distress. Our findings highlight the significant longer-term implications of mental health on the net worth of individuals.
BibTeX @article{BEP2022,
  title={When it rains it drains: {P}sychological distress and household net worth},
  author={Balloch, Adnan and Engels, Christian and Philip, Dennis},
  journal={Journal of Banking \& Finance},
  volume={143},
  pages={106620},
  year={2022},
  publisher={Elsevier}
}

Financial Literacy and Fraud Detection (with Kamlesh Kumar and Dennis Philip)
European Journal of Finance, 26.4-5 (2020): 420-442.
[SSRN]

Abstract Who is better at detecting fraud? This paper finds that more financially knowledgeable individuals have a higher propensity to detect fraud: a one standard deviation increase in financial knowledge increases fraud detection probabilities by 3 percentage points. The result is not driven by individuals' higher financial product usage and is observed to be moderated by individuals' low subjective well-being, effectively depleting skills to detect fraud. Interestingly, prudent financial behavior relating to basic money management is found to have negligible effects for detecting fraud. The findings attest to the fact that fraud tactics are increasingly complex and it is greater financial knowledge rather than basic money management skills that provides the degree of sophistication necessary to detect fraud. The paper draws policy implications for consumer education programs to go beyond cultivating money management skills, and provide advanced financial knowledge necessary for tackling fraud.
BibTeX @article{EKP2020,
  title={Financial literacy and fraud detection},
  author={Engels, Christian and Kumar, Kamlesh and Philip, Dennis},
  journal={The European Journal of Finance},
  volume={26},
  number={4-5},
  pages={420--442},
  year={2020},
  publisher={Routledge, part of the Taylor \& Francis Group}
}