Image of Business Instructional Facility

Sep 9, 2019 2019-09 Faculty Finance

Fonseca: "I have great colleagues" at Gies

You might call it a cross-continental coincidence that Julia Fonseca is starting her professional career at Gies College of Business. The new assistant professor of finance, who was born and raised more than 5,000 miles away in Brazil, will walk the same campus streets as her parents, who both earned their PhDs at Illinois – her father in economics and her mother in chemical engineering.

“I had actually visited here once as a teenager, while my dad was visiting, so I did knowJulia Fonseca 14 a little bit about the campus,” said Fonseca, who added that her brother was born in Urbana, while their parents were finishing their PhDs. “My parents are excited for me to work here. I’m looking forward to them visiting because I’m sure Champaign-Urbana has changed a lot in the last 30 years.”

Both of her parents are professors at the Federal University of Rio de Janeiro, where Fonseca earned her bachelor’s in economics. Now she’ll begin a similar career at Gies, and she’s anxious to get started.

“This seems like a really great department,” she said. “I have a lot of great colleagues with varied interests – some that directly match mine and others that I’m going to learn a lot from. The dynamics here are tremendous.”

Fonseca earned both her master’s and PhD in economics from Princeton, and she had multiple job offers before ultimately choosing Gies. Her research interests include corporate finance, household finance, and macroeconomics. In a broad sense, she examines the relationship between credit and the economy.

“There are really two main components to this,” she said. “One is how people or institutions interact with credit, such as how access to credit changes the type of worker a company hires. The second component is how a large number of individual decisions aggregate to an economic impact.”

One of her recent papers, “Credit Access and Financial Health: Evaluating the Impact of Debt Collection,” looked at how recent legislation restricting debt collection affected banks’ willingness to lend. The idea is that restricting banks’ ability to recover their loans might cause them to be less willing to lend in the first place. Fonseca and her colleagues examined how restrictive legislation affected individuals’ access to credit and also their financial outcomes, such as delinquencies and bankruptcies.

“Over the last 15 years, certain states have restricted debt collections because they feel it might be detrimental to consumers,” she said. “What we found, though, was once states restrict debt collectors’ ability to collect, there was less credit available for individuals and worse financial outcomes. Consumers were more likely to have a delinquency, and overall we saw worse credit scores.”

“One possibility for this is that there’s not a debt collector hounding you, so you may feel more comfortable being delinquent,” she explained. “Another possible explanation is that it is a response to less credit. If a consumer’s credit dries up, they may be more likely to become delinquent.”

These types of real world consumer issues are what Fonseca hopes to convey in her teaching. In the spring, she will teach an advanced corporate finance course for undergraduates.

“I really want to get students engaged with the material,” she said. “Real-world examples are critical for this because the lessons they learn are lessons they can carry on to other aspects of their life.”