Working PapersSubramanian, Krishnamurthy., Tantri, Prasanna.,Bhowal, Subhendu. "Soft Information and The Cost Of Job Rotation: Evidence From Loan Officer Rotation"Read Abstract >Close >We highlight the costs from a principal rotating agents among tasks when decision-making inside a firm is driven by soft information. These costs arise because (i) an incoming agent cannot verify the information set that the outgoing agent utilized, and (ii) neither agent receives the entire marginal benefit/penalty for her effort. We provide evidence of this cost using unique loan and officer level data from a large public sector bank in India. Using the bank's fixed-tenure-based policy of loan officer rotation for identification, we find that default probabilities are 8% higher for loans affected by job rotation when compared to other loans. This difference is not explained by differences in hard information or the loss of a lending relationship

Working PapersMukherjee, Saptarshi., Subramanian, Krishnamurthy., Tantri, Prasanna. "Borrower Distress And Debt Relief: Evidence From A Natural Experiment in India"Read Abstract >Close >Using loan account level data for more than 12,000 agricultural borrowers of a large public sector bank in India, we compare the effect of the loan waiver for distressed and non- distressed borrowers. First, we find significant improvements in loan repayment by distressed borrowers post the waiver. However, we observe no such improvement for non-distressed borrowers. Second, post the waiver, loans provided to distressed borrowers increase signif- icantly while the loans provided to non-distressed borrowers decrease significantly. Thus, while the credit worthiness of distressed borrowers that utilize the waiver increases while the credit worthiness of non-distressed borrowers that exploit the waiver decreases. Ours is the first study to provide empirical evidence on the costs and benefits of debt moratoria.

Working PapersKumar, Nitin., Hoberg, Gerard.,R. Prabhala, N. "Mutual Fund Competition,Managerial Skill, and Alpha Persistence"