Chao Liu 刘超

I am an Assistant Professor of Finance at the Chinese University of Hong Kong (CUHK) Business School.

I received my Ph.D. from Northwestern University (Kellogg).

My research interests are in household finance, real estate, and development economics.

Curriculum Vitae: CV

Email: chaoliu@cuhk.edu.hk

Working Papers

Language Frictions in Consumer Credit

Revise and Resubmit at Journal of Finance

Abstract

This paper studies how language barriers between lenders and borrowers translate into differences in borrower outcomes in the U.S. mortgage market. I use survey data to infer and machine learning techniques to predict borrowers' English proficiency. I document significant descriptive differences in perceptions of mortgages, application experiences, and mortgage rates between limited English proficient (LEP) and non-LEP borrowers. To measure the causal effects of language frictions, I exploit a Federal Housing Finance Agency policy that provided translated mortgage documents in Spanish to mortgage lenders. After the policy change, LEP Hispanic borrowers had a streamlined application process, contacted more lenders, understood mortgage contracts better, and enjoyed lower borrowing costs. Reducing language frictions also led to expanded access to credit for LEP borrowers. Overall, my findings highlight a cost-effective way to create a responsible inclusion of well-qualified LEP borrowers in the mortgage market.

Income Inequality, Housing Supply, and House Prices

with Edmund Y. Lou and Wei Xiang

Abstract

This paper studies a supply-side channel through which income inequality increases house prices in the United States. We develop a conceptual framework in which greater income inequality leads to more restrictive housing regulation, tighter housing supply, and higher house prices. Using county-level data from 1990 to 2017 and a novel Bartik-style instrument for the Gini coefficient, we find that a one standard deviation increase in the Gini coefficient raises house prices by 26 percent, accounting for roughly 8 percent of the house price increase over this period. Consistent with our framework, more unequal areas exhibit both higher house prices and fewer housing units. A one standard deviation increase in the Gini coefficient is associated with a 58 percent decline in building permits issued over the subsequent decade and a 2 percentage point decrease in the homeownership rate. We provide evidence that more unequal areas exhibit greater opposition to pro-supply housing reform and more restrictive land-use regulation. Our findings highlight how income inequality shapes housing market dynamics through its impact on new housing supply and housing regulation, with important consequences for housing affordability.

The Very Long-Run Effect of Large-Scale Deworming

with Gordon G. Liu

Abstract

This paper studies the very long-run effects of an unprecedented large-scale schistosomiasis control campaign in China in the late 1950s. We merge hand-collected county-level infection data with census and survey microdata to provide direct evidence on how an early-life deworming intervention shaped life trajectories. Using a difference-in-differences framework, we find that the campaign significantly increased educational attainment for rural populations. This effects were larger for females and children with disadvantaged socioeconomic background. Early-life exposure to the campaign also had substantial effects on labor market success and household economic status more than 50 years later. Finally, we document intergenerational benefits: the children of treated mothers were significantly more likely to complete high school. Our findings highlight the lasting role of mass deworming in promoting human capital accumulation and reducing inequality in low-income settings.