Working Paper
Chenzi Xu and He Yang. Working Paper. “National Banks and the Local Economy (Job Market Paper)”. PDFAbstract

This paper studies how banks impact the local economy and in particular examines their role in providing monetary services through stable liabilities. We study the United States National Banking Act of 1864 that passed during a period when the circulating money supply primarily consisted of privately issued bank notes. The Act required ``national banks'' to guarantee bank note liabilities with federal bonds, thereby creating a new and stable currency, reducing transactions costs and facilitating exchange. National banks also faced regulatory capital requirements that varied by town population. Using the jump in the capital requirement as an instrument for national bank entry, we find that the composition of agricultural production shifted from non-traded crops to traded crops while total production was unaffected. Moreover, trade activity proxied by employment in trade-related professions grew. National banks also led to significant manufacturing output growth that was primarily driven by inputs use, and these changes can be attributed to national banks' role in providing short-term credit and reducing transactions costs in trade. Furthermore, the higher levels of manufacturing output persisted for two decades.

He Yang JMP

He Yang. Working Paper. “Regional Economic Growth and Firm Performance”. PDFAbstract

Changes in local economic conditions can have important impacts on the performance and investment decisions of firms operating there. The spatial distribution of firms' current assets can therefore be a determinant of overall firm outcomes. I use a sample of 285 publicly traded retail, restaurant, hotel, and entertainment service chains from 1997 to 2016 to study the effect of quarterly state-level income growth on firms, exploring variation in the geographic location of stores. I find that firms with more stores in high-growth states have higher sales growth contemporaneously and higher predictable stock returns subsequently. In addition, firm expansion is positively associated with past state-level income growth. While higher investment sensitivity to positive past local income growth does not lead to higher future revenue growth, it is associated with a small increase in profitability. The results suggest that regional economic conditions are important for firm performance, but are under-weighted by investors and managers.

Link to paper

In Preparation
He Yang. In Preparation. “Large Firms and Small Businesses”.Abstract

I study local small business dynamics following entries of large firms, using the winner and close runner-up counties for “million-dollar plants.” Large firms may increase local demand for goods and services by positively impacting total income. Analysis with county-level business data shows that the number of small business establishments grew more following the entry of million-dollar plants, both immediately after the entry and in the three to five years after the entry. The evidence suggests that large firms’ presence may lead to indirect job creation and business growth, and that policy makers should take these effects into account when providing subsidies to attract large business establishment.

Arun G. Chandrasekhar, Benjamin Golub, and He Yang. Submitted. “Signaling, Shame, and Silence in Social Learning”. PDFAbstract
We examine how a social stigma of seeking information can inhibit learning.
Consider a Seeker of uncertain ability who can learn about a task from an Advisor. If higher-ability Seekers need information less, then a Seeker concerned about reputation may refrain from asking to avoid signaling low ability. Separately, low-ability individuals may feel inhibited even if their ability is known and there is nothing to signal, an effect we term shame. Signaling and shame constitute an overall stigma of seeking information. We distinguish between the constituent parts of stigma in a simple model and then perform an experiment with treatments designed to detect both effects.  Seekers have three days to retrieve information  from paired Advisors in a field setting. The first arm varies whether needing information is correlated with ability; the second varies whether a Seeker's ability is revealed to the paired Advisor, irrespective of the seeking decision. We find that low-ability individuals do face large stigma inhibitions: there is a 55% decline in the probability of seeking when the need for information is correlated with cognitive ability. The second arm allows us to assess the contributions of signaling and shame, and, under structural assumptions, to estimate their relative magnitudes.  We find signaling to be the dominant force overall. The shame effect is particularly pronounced among socially close pairs (in terms of network distance and caste co-membership) whereas  signaling concerns dominate for more distant pairs.