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Date Available

5-6-2026

Year of Publication

2026

Document Type

Doctoral Dissertation

Degree Name

Doctor of Philosophy (PhD)

College

Business and Economics

Department/School/Program

Finance and Quantitative Methods

Faculty

Kristine Hankins

Faculty

Russell Jame

Abstract

In my first chapter, I show how consumer left-digit bias affects borrowing costs in the US residential mortgage market. I find that the distribution of mortgage rates bunch at .99-ending rates just below left-digit changing thresholds, and that this bunching is greater in the distribution of rates selected by borrowers than those simply offered by lenders. Comparing observably similar borrowers within the same 1-bp interest rate band, selecting similar mortgage products, in the same census tract and origination month, I show that borrowers receiving .99-ending rates pay significantly more fees than borrowers receiving the nearest whole-number rate just above them, but do not exhibit slower ex post prepay speeds. This fee difference often exceeds the undiscounted value of their monthly payment reduction, even if one assumes that the borrower will retain their loan until maturity. Using within-lender variation in fees across the mortgage rate distribution, I show that fees spike discontinuously around .99-ending rates. In total, I estimate a loss in household wealth for .99-ending rate borrowers of $230 Mn per year, which is born disproportionately on borrowers with lower income and credit scores.

In my second chapter, I examine the spillover effects of exclusivity provisions when they bar entry of some rivals, but not all. After United Wholesale Mortgage (UWM) banned affiliated brokers from working with Rocket Mortgage, I document significant effects on smaller wholesale lenders and their borrowers. To identify these effects, I compare within-lender changes in wholesale prices to retail prices for observably identical borrowers receiving the same mortgage product. Consistent with a reallocation of elastic demand to small wholesale lenders, I find that these lenders lowered their rates by 5 bps on average. Although exposure to this shock varied by geography, I document a uniform pricing response across geographies, suggesting pricing frictions at the lender level, as well as positive externalities on borrowers that were not displaced by the provision. These findings have broad implications for anti-trust policy in a variety of settings, including manufacturer-distributor, employee non-compete (NCAs), and technology licensing agreements (TLAs).

Digital Object Identifier (DOI)

https://doi.org/10.13023/etd.2026.268

Archival?

Archival

Funding Information

PhD Research Excellence Award; UKY Gatton College of Business; 2025

Research Fellowship; FDIC Center for Financial Research; 2024

Research Excellence Committee Grant; UKY Gatton College of Busines; 2022

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