Giorgia Piacentino

Daniel W. Stanton Associate Professor of Business, Columbia Business School

CEPR Research Affiliate

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Published Papers

The Paradox of Pledgeability accepted at the Journal of Financial Economics

With Jason R Donaldson and Denis Gromb

We develop a model in which collateral serves to protect creditors from the claims of competing creditors. We find that collateralized borrowing has a cost: it encumbers assets, constraining future borrowing and investment---there is a collateral overhang.

Household Debt and Unemployment forthcoming at the Journal of Finance

With Jason R Donaldson and Anjan Thakor

Using a search model, we find that levered households protected by limited liability suffer from a household-debt-overhang problem that leads them to require high wages to work. Firms respond by posting high wages but few vacancies.   The equilibrium level of household debt is inefficiently high due to a household-debt externality.

Venture Capital and Capital Allocation forthcoming at the Journal of Finance

I show that venture capitalists’ career concerns can have beneficial effects in the primary market: they can mitigate information frictions, helping firms go public.

Warehouse Banking 2018, Journal of Financial Economics 129 (2)

With Jason R Donaldson and Anjan Thakor

We develop a theory of banking that explains why banks started out as commodities warehouses. Our theory helps to explain how modern banks create funding liquidity and why they combine warehousing (custody and deposit-taking), lending, and private money creation within the same institutions.

Contracting to Compete for Flows, 2018, Journal of Economic Theory 173

With Jason R Donaldson

Delegated asset managers frequently refer to public information, such as credit ratings and benchmark indices, in the contracts they offer their investors. However, regulators have advised against this. Why do asset managers refer to public inforamtion in their contracts? We show that it is a way for asset managers to compete for flows of investor capital, even though it is socially inefficient.

The Wall Street Walk when Blockholders Compete for Flows, 2015, Journal of Finance 70 (6)

With Amil Dasgupta

Many blockholders are money managers. We show that, when money managers compete for investor capital, the threat of a block sale ("exit") loses credibility, weakening its governance role.

Working Papers

Deadlock on the Board (Revise and resubmit at the Review of Financial Studies)

With Jason R Donaldson and Nadya Malenko

ASU Sonoran Winter Finance Conference 2018 Best Paper Award

In a dynamic model of board decision making, directors strategically block proposals that benefit other directors. Such deadlock on the board explains CEO entrenchment and strategic inertia. We study how board composition affects deadlock, and find, for example, that board diversity can exacerbate it.

Intermediation Variety (Revise and resubmit at the Journal of Finance)

With Jason R Donaldson and Anjan Thakor

Non-depository financial intermediaries ("non-banks") have a higher cost of capital than depositories ("banks") do, because they do not benefit from government safety nets. How do they still compete with banks?  Non-banks use their high cost of capital as a commitment device not to fund traditional projects, inducing entrepreneurs to innovative efficiently.

Money Runs

With Jason R Donaldson

We present a banking model in which bank debt is traded over the counter like banknotes were in the nineteenth century and repos are today. This focus on bank money creation reveals a new rationale for demandable debt and a new type of bank run, or "money run."


With Jason R Donaldson

Banks hold gross debts without netting them out.  Why?  These gross debts implement valuable contingent transfers via the option to dilute.

Do Institutional Investors Improve Capital Allocation?

(Largely subsumed by Venture Capital and Capital Allocation)

Work in Progress

The Opportunity Cost of Collateral

With Jason R Donaldson and Jeongmin (Mina) Lee

Conflicting Priorities: A Theory of Covenants and Collateral

With Jason R Donaldson and Denis Gromb