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Boris Vallée's Academic Page

Torstein Hagen Associate Professor of Finance

Harvard Business School 

Tel: (617) 496-4604


Boris Vallée is the Torstein Hagen Associate Professor in the Finance Unit of Harvard Business School.

Professor Vallée’s research traces the motives behind and the effects of financial innovation in recent decades. He pursues this line of inquiry through empirical studies of corporate finance, household finance, public finance, and financial institutions, developing novel data sets and measures. He is also actively contributing to the Labor and Finance literature. His work has been cited by Forbes, The Wall Street Journal and the Boston Globe. He teaches Real Property in the MBA elective curriculum, and previously taught the Finance II (Corporate Finance) course in the MBA required curriculum. He is an Associate Editor at the Journal of Corporate Finance, a member of the scientific comittee of the Autorites des Marches Financiers (AMF), and a fellow of the Luohan Academy.

He holds a Ph.D. in finance and a M.Sc. in management, both from HEC Paris, and is a CFA Charterholder. Before beginning his doctoral studies, Professor Vallée was an investment banker at Deutsche Bank in London.



( 1 )

with Claire Célérier, Quarterly Journal of Economics 132, no. 3 (August 2017): 1469–1508
Winner of 2014 AQR Top Finance Graduate Award
Winner of the Ieke van den Burg Prize for Research on Systemic Risk (ESRB)
Selected for the 2014 WFA Annual Meetings, and the 2014 EFA Annual Meetings 

This paper investigates the rationale for issuing complex securities to retail investors. We focus on a large market of investment products targeted exclusively at households: retail-structured products in Europe. We hypothesize that banks strategically use product complexity to cater to yield-seeking households by making product returns more salient and shrouding risk. We find four empirical results consistent with this view. First, we show that structured products with complex payoff formulas offer higher headline rates, and that they more frequently expose investors to a complete loss of their investment. We then document that banks are more inclined to issue high-headline-rate and more complex products in low-rate environments. Finally, we find that high-headline-rate and more complex products are more profitable for banks, and that their ex post performance is lower.

( 2 )

with Christophe Pérignon, Review of Financial Studies 30, no. 6 (June 2017): 1903–1934
Selected for the 2015 NBER Corporate Finance, the 2012 WFA Annual Meetings, the 2017 AFA Annual Meetings, and the 2013 EFA Annual Meeting

We examine the toxic loans sold by investment banks to local governments. Using proprietary data, we show that politicians strategically use these products to increase chances of being re-elected. Consistent with greater incentives to hide the cost of debt, toxic loans are utilized significantly more frequently within highly indebted local governments. Incumbent politicians from politically contested areas are also more likely to turn to toxic loans. Using a difference-in-differences methodology, we show that politicians time the election cycle by implementing more transactions immediately before an election rather than after. Politicians also exhibit herding behavior. Our findings demonstrate how financial innovation can foster strategic behaviors.

( 3 )

with Claire Célérier, Review of Financial Studies 32, no. 10 (October 2019): 4005–4040
Selected for the 2015 NBER Corporate Finance Meeting, the 2015 FRA Conference, the 2016 Texas Finance Festival, the 2015 AEA and the 2014 EFA Annual Meetings

To study the role of talent in finance workers' pay, we exploit a special feature of the French higher education system. Wage returns to talent have been significantly higher and have risen faster in finance since the 1980s than in other sectors. Both wage returns to project size and the elasticity of project size to talent are also higher in this industry. Last, the share of performance pay varies more for talent in finance. These findings are supportive of finance wages reflecting the competitive assignment of talent in an industry that exhibits a high complementarity between talent and scale. 

( 4 )

with Yao Zeng, Review of Financial Studies 32, FinTech Special Edition, no. 5 (May 2019): 1939–1982 
Selected to the 2018 Texas Finance Festival

Marketplace lending relies on large-scale loan screening by investors, a major deviation from the traditional banking paradigm. Theoretically, participation of sophisticated investors in marketplace lending improves screening outcomes but also creates adverse selection. In maximizing loan volume, the platform trades of these two forces by choosing intermediate levels of platform pre-screening and information provision to investors. We use novel investor-level data to test these predictions. We empirically show that more sophisticated investors screen loans differently and systematically outperform less sophisticated investors. However, the outperformance shrinks when the platform reduces information provision to investors, consistent with platforms managing adverse selection.  

( 5 )

Review of Corporate Finance Studies 8, no. 2 (September 2019): 235–259
Editor's Choice
Winner of the 2020 RCFS Rising Scholar Award
Winner of the Arthur Warga Award for Best Paper in Fixed Income (SFS Cavalcade Conference)
Selected for the 2016 AEA annual meetings, 2016 FIRS Conference and 2015 Cavalcade Conference

This paper studies liability management exercises (LME) by banks, which have comparable regulatory capital effects than contingent capital triggers. LMEs are concentrated on low capitalization situations, both in the cross-section and in the time series and are frequently associated with equity issuances. These exercises prove effective at improving bank capitalization levels. The market reaction to LMEs is positive and mostly accrues to debt holders. These findings strengthen the case for innovative liabilities securities as a tool to improve bank resilience. 

( 6 )

with Laurent Calvet, Claire Celerier and Paolo Sodini, CEPR Working Paper, No. 14955
Journal of Finance, forthcoming
Selected to 2020 NBER Asset Pricing, the 2017 NBER Behavioral Finance, the 2018 NBER Household Finance, the 2018 WFA, and the 2017 EFA meetings

This paper shows that securities with non-linear payoff designs can foster household risk-taking. We demonstrate this effect by exploiting the introduction of capital guarantee products in Sweden between 2002 and 2007. Their fast and broad adoption is associated with an increase in expected financial portfolio returns. The effect is especially strong for households with low risk appetite ex ante. These empirical facts are consistent with a life-cycle model in which households have pessimistic beliefs or preferences combining loss aversion and narrow framing. Our results illustrate how security design can mitigate behavioral biases to increase mean household portfolio returns.

Working Papers

Working Papers

( 7 )

Selected for the 2019 WFA, the 2019 FIRS, and the 2018 EFA meetings

Using novel data on 1,240 credit agreements, we investigate sources of contractual complexity in the leveraged loan market. While negative covenants are widespread, carve-out and deductible clauses that qualify them are as frequent. We propose simple measures of contractual optionality based on the usage of such clauses. We argue that these measures capture contract weakness, as they uniquely explain the market-wide price reaction that followed the 2017 J.Crew restructuring, a high-profile use of such contractual elements. Leveraged buyouts have significantly weaker loan agreements, and more non-bank funding of a loan is conducive to weaker contractual terms. Weak covenants translate to modestly higher issuance spreads.

( 8 )

with Jean-Noel Barrot, Thorsten Martin and Julien Sauvagnat
Revise and Resubmit at Review of Financial Studies
Selected for the 2019 NBER Corporate Finance, the 2021 WFA, the 2021 EFA, and the 2021 North America Cavalcade meetings

We investigate the labor market effects of a loan guarantee program targeting French SMEs in the midst of the financial crisis. Exploiting worker-level panel data and differences in regional treatment intensity in a border discontinuity design, we find that the program has a significant and persistent positive impact on workers' employment and earnings trajectories, in particular for those initially employed in high-unemployment areas. However, the program dampens workers' reallocation towards productive firms, especially for workers with high earnings capacity. In the aggregate, the program appears to be revenue-positive for the government, as the savings in unemployment benefits outweigh the losses from the defaults of guaranteed loans, and the number of jobs preserved by the program is of comparable magnitude as the number of workers prevented from moving to a more productive firm.

( 9 )

with Pulak Ghosh and Yao Zeng
Revise and Resubmit at Journal of Finance
Selected for the 2021 NBER Asset Pricing, the 2022 AFA, the 2022 RCFS Winter Conference, the 2021 Texas Finance Festival, 2021 EFA, and the 2021 CICF

We uncover an informational synergy between FinTech lending and cashless payments. Theoretically, FinTech lenders screen borrowers more efficiently when borrowers use cashless payments that produce transferable and verifiable information.  In turn, a strategic consideration to stand out from non-adopting borrowers pushes borrowers to adopt cashless payments.  Empirically, a larger use of cashless payments predicts a higher likelihood of loan approval, a lower interest rate, and a higher loan amount, especially for firms of higher credit quality. This synergy provides an economic rationale for open banking, and more broadly for data sharing and a lending model without traditional banking relationships.   

( 10 )

with Julien Sauvagnat

We examine the response from municipalities and their voters to a large and exogenous increase in municipal indebtedness. We show that municipalities with ``toxic loans'' on their balance sheet exhibit a large increase in their debt and interest expenses following the Great Financial Crisis. This large increase in indebtedness causes a twice-as-large reduction in municipal investments, whereas local taxes remain unaffected. The reduction in investments is particularly pronounced for municipalities that are politically contested. These empirical findings are consistent with a model of municipal investment in which electoral competition act as a disciplinary device for local politicians. 

( 11 )

with Claire Celerier and Gordon Liao

This paper investigates the effects of the issuance of retail products with non-linear payoffs on option prices. For a given underlying asset, when the outstanding volume of products embedding a short-put position increases, implied volatility at the corresponding strike decreases. A similar pattern exists for the dividend term structure: larger outstanding volumes of retail structured products are associated with a flattened dividend term structured. A simple trading strategy exploiting this pattern leads to a Sharpe ratio above 2. These results are consistent with the existence of segmented markets and speak to the equilibrium effects of the retail demand for innovative securities.

( 12 )

with Claire Celerier and Alexey Vasilenko
Selected for the 2024 AFA Meetings, the 2022 EFA Meetings, the 2022 FSU SunTrust Beach Conference

By exploiting an extensive dataset covering wages, publications and socio-demographics for 80,000 public-university faculty from all fields, we show that tenure-faculty in finance earn wages 50\% higher than in other fields. The premium is larger for faculty at highly ranked institutions and for junior faculty. Finance faculty wages are significantly more sensitive to students' future compensation than in other fields. Finance academia is characterized by high university revenues per faculty, a limited supply of relevant profiles, and attractive outside options prior to doctoral studies.

( 13 )

with Jose Murillo and Dolly Yu

Using novel data from a Mexican FinTech firm, we study the adoption by workers of earned wage access (EWA), an innovative financial service offered by firms to their employees as a benefit, and its potential effects on worker welfare. We find usage to be significant and concentrated towards the end of the pay cycle. We establish that such usage is associated with a higher employee retention for low rank workers, suggestive of improved welfare for financially constrained individuals. We consider possible underlying mechanisms for a causal effect, such as liquidity insurance or catering to present-bias, and find empirical evidence supportive of both being at play for different segment of users.

( 14 )

with Dan Green
Selected for the 2023 NBER Corporate Finance SI, 2022 USC Finance, Organisation and Markets Conference


We study whether exit policies by financial institutions are an effective tool to address climate change, using bank policies targeting the coal industry around the world as a laboratory. In contrast to theories predicting divestment to be ineffective because capital is highly substitutable, we find large effects of these policies. We first develop a comprehensive set of measures of policy strength, and document a large heterogeneity along this dimension. Using a shift-share instrument combining bank-level policy strength and timing with borrower-bank relationships, we document that bank exit policies affect both the financing and operation of coal assets. We observe negative effects of the policies on coal firm debt issuance, as well as on their outstanding debt and total assets. Substitution from exiting lenders to non-exiting ones, as well as to equity issuance, appears to be limited. Coal power plants owned by firms exposed to bank exit policies are more likely to be retired, translating into lower CO2 emissions. However, the current aggregate impact of such policies is limited by their distribution: banks with larger coal lending businesses adopt fewer and weaker exit policies.

Work in Progress

Work in Progress
  • Partisan Portfolios, with Emil Siriwardane (HBS) and Johnny Tang (Cornell) [COMING SOON]

  • Demand for Security Design: Experimental Evidence, with Claire Celerier (U of Toronto - Rotman) and Yueran Ma (U of Chicago - Booth) 

  • Financing Frictions and Environmental Performance in Aviation, with Catherine Casamatta (TSE) and Sophie Shive (Notre Dame)

HBS Case Studies

Case & Teaching Materials

1. "Migrante: Using Tech to Provide Financial Inclusion to Immigrants", with Mauricio Larrain, Harvard Business School Case, July 2021

2. "The Big Blue: Starting a Real Estate Asset Management Firm", with Nikodem Szumilo, Harvard Business School Case, March 2021

3. "Case in Point: Home Equity Investment", with Dan Green, Sid Beaumaster and Dolly Yu, Harvard Business School Case, October 2020. 

4. "Seso Global: Building a Blockchain-enabled Property Marketplace in Nigeria." with Dolly Yu, Harvard Business School Case 220-055, February 2020. 

5.  "OpenInvest: Socio-responsible Robo-advisor", with Shawn Cole and Nicole Tempest Keller. Harvard Business School Case 218-064, February 2018. (Revised August 2018.)

6. "Deutsche Bank: Structured Retail Products." with Jerome Lenhardt, Harvard Business School Case 217-037, November 2016. (Revised March 2018.)

7. "Exotic Interest Rate Swaps: Snowballs in Portugal.", with Patrick Augustin and Philippe Rich, Harvard Business School Case 217-050, January 2017.

8. "Tableau." Harvard Business School Case 216-045, March 2016. (Revised March 2018.)



  • Real Property - MBA Elective Curriculum: 2018-YTD   (Latest teaching evaluations: 6.6/7.0 and 6.5/7.0)

  • Finance II - MBA Required Curriculum: 2014-2017 (Latest teaching evaluations: 7.0/7.0 and 6.9/7.0)

  • Executive Education: Real Estate Management, Family Office Program, Custom Program - Ongoing

  • Summer Venture in Management Program (residential educational program for rising college seniors from minority backgrounds) - Ongoing

Awards & Honors

Awards & Honors

  • Distinguished Referee Award, Review of Financial Studies, SFS, 2022

  • Rising Scholar Award (Winner), Review of Corporate Finance Studies, SFS, 2020

  • Arthur Warga Award for Best Paper in Fixed Income (Winner), SFS Cavalcade Conference, 2015 

  • Ieke van den Burg Prize} for Research on Systemic Risk (Winner), ESRB, joint with C. Celerier, 2015 

  • AQR Top Finance Graduate Award 2014 (Winner), Copenhagen Business School, 2014 

  • Best PhD Thesis in Economics (Winner) - French Economic Association (AFSE), 2015

  • Best PhD Thesis in Finance (Winner) - French Finance Association (AFFI-Eurofidai), 2015 

  • Best PhD Thesis (Winner) - HEC Foundation, 2015 

  • Benjamin Delessert Award on Household Savings (Special Award) - BPCE, 2015 

  • Best PhD Paper in Honor of Professor Stuart I. Greenbaum 2013 (Finalist), WUSL, 2013 

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