25 Years IWH

Vahid Saadi

Vahid Saadi
Current Position

since 8/15

Scientific Assistant to the President  

Halle Institute for Economic Research (IWH) – Member of the Leibniz Association

since 8/15

Economist in the Department of Financial Markets

Halle Institute for Economic Research (IWH) – Member of the Leibniz Association

Research Interests

  • banking
  • corporate finance
  • real estate markets

Vahid Saadi joined the IWH in August 2015 as the scientific assistant to the president and also as a member of the Department of Financial Markets. His research is focused on the effects of financial intermediation on the real economy.

Since 2013, Vahid Saadi has been involved in scientific research in the fields of empirical banking, corporate finance and real estate markets. He also taught theory of corporate finance at the PhD level at Goethe University. Vahid has been doing his PhD in Finance at the Goethe University in Frankfurt am Main since September 2011 and is still part of this programme. He received his bachelor’s degree in science in mechanical engineering from the University of Tehran and earned a master’s degree in business administration with a major in finance from Sharif University of Technology, both in Iran.

Your contact

Vahid Saadi
Vahid Saadi
Mitglied - Department Präsidialbereich
Send Message +49 345 7753-766 Personal page

Publications

Working Papers

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Public Bank Guarantees and Allocative Efficiency

Reint E. Gropp Andre Guettler Vahid Saadi

in: IWH Discussion Papers , No. 7, 2015

Abstract

In the wake of the recent financial crisis, many governments extended public guarantees to banks. We take advantage of a natural experiment, in which long-standing public guarantees were removed for a set of German banks following a lawsuit, to identify the real effects of these guarantees on the allocation of credit (“allocative efficiency”). Using matched bank/firm data, we find that public guarantees reduce allocative efficiency. With guarantees in place, poorly performing firms invest more and maintain higher rates of sales growth. Moreover, firms produce less efficiently in the presence of public guarantees. Consistently, we show that guarantees reduce the likelihood that firms exit the market. These findings suggest that public guarantees hinder restructuring activities and prevent resources to flow to the most productive uses.

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Mortgage Supply and the US Housing Boom: The Role of the Community Reinvestment Act

Vahid Saadi

in: IWH Discussion Papers , No. 32, 2016

Abstract

This paper studies the role of the Community Reinvestment Act (CRA) in the recent US housing boom-bust cycle. Using a difference-in-differences matching estimation, I find that the enhancement of CRA enforcement in 1998 caused a 7.7 percentage points increase in annual growth rate of mortgage lending by CRA-regulated banks to CRA-eligible census tracts relative to a group of similar-income CRA-ineligible census tracts within the same state. Financial institutions which are not subject to the CRA, however, do not show any change in their mortgage supply between these two types of census tracts after 1998. I take advantage of this exogenous shift in mortgage supply within an instrumental variable framework to identify the causal effect of mortgage supply on housing prices. I find that every 1 percentage point higher annual growth rate of mortgage supply leads to 0.3 percentage points higher annual growth rate of housing prices. Reduced form regressions show that CRA-eligible neighborhoods experienced higher house price growth during the boom and sharper decline during the bust period. I use placebo tests to confirm that this effect is in fact channeled through the shift in mortgage supply by CRA-regulated banks and not by unobserved demand factors. Furthermore, my results indicate that CRA-induced mortgages went to borrowers with lower FICO scores, carried higher interest rates, and encountered more frequent delinquencies.

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