Juan Pablo Gorostiaga

My main research interests are related to corporate finance and financial intermediation

Working Papers

• "Concentrating on Bailouts": Government Guarantees and Bank Asset Composition.  (SSRN link)
  With Christian Eufinger and Björn Richter. (R&R at Journal of Financial and Quantitative Analysis). This paper shows that expectations of government bailouts incentivize banks to concentrate their portfolios, a behavior we term "risk-taking via asset concentration." Using U.S. bank panel data and exploiting exogenous variation in political connections, we find that banks expand their exposure to asset categories that already constitute a significant share of their portfolios when bailout expectations rise, resulting in greater portfolio concentration. In mortgage lending, banks similarly intensify lending to counties that are highly correlated with their pre-existing mortgage holdings. Concentrated exposures increase bank insolvency risk, amplify systemic risk, and may remain undetected without portfolio-level risk assessments.

  • Presented at EFA 2023, EEA 2023, FMA 2023, FINEST 2023, MadBar 2023, PET 2024 and Bank of England.

• "The Real Effects of Bank Bailouts Guarantees". (link) 

With Christian Eufinger and Zhiqiang Ye. (Submitted) Bailout guarantees affect not only whom banks finance, but also how they structure the financing they provide. We develop a model in which anticipated bailout protection induces banks to design loan contracts that lead borrowers to take on excessive leverage, overinvest, and potentially pursue inefficient, high-risk projects. We test these predictions using U.S. data, exploiting changes in whether banks’ home states are represented on the Senate Banking Committee as a proxy for anticipated bailout protection. Banks with greater anticipated protection face lower wholesale funding costs, increase wholesale borrowing, and expand lending, including within local credit markets and bank–firm relationships. Firms more exposed to these banks shift toward bank debt, increase leverage and investment, and exhibit greater overinvestment, lower productivity, and a decline in the marginal revenue product of capital. Consistent with poorer investment decisions, acquisitions by more exposed firms are associated with lower acquirer announcement returns and a higher likelihood of negative returns. These findings suggest that bailout guarantees distort corporate investment by changing the incentives embedded in financing contracts.

• • Presented at Aarhus Finance Forum 2026, Finance UC 2025, Finance Forum 2025 and CFRN Young Finance Scholars Annual Conference 2025.

• “Banking on Peers”: Industry Spillovers and Loan Portfolio Risk. (SSRN link) 

Single-authored Job Market Paper. I show lenders with high exposure to a particular industry extend loans with stricter non-monetary contract terms. Specifically, these lenders deter debt-funded growth and induce a more conservative behavior by including tighter covenants, over and above the optimal level from a bilateral perspective, being incrementally stricter when rival borrowers are closer to financial distress. This is consistent with lenders using loan contract terms to tame borrowers’ growth appetite, thus reducing the risk of their industry-wide exposure. Exploiting bank mergers as an exogenous change in lender exposure, I verify that these findings are robust to endogeneity concerns and alternative explanations.

• • Presented at ASSA 2022 Annual Meeting – AFA PhD Session, NFA 2022, FDIC Annual Bank Research Conference 2022, FMA Atlanta 2022, FMA Europe 2022, Finance Forum 2022, FMCG Conference 2022, Conference on Credit Risk Evaluation 2022, UdeSA Annual Meeting 2021, and seminars  at Imperial College, U. Pompeu Fabra, Sveriges Riksbank, Banco de España, Paris Dauphine PSL, ESCP, CUNEF, UTDT, UdeSA, and IESE.