Research

Abstract: This paper investigates how interest rate fluctuations shape life insurance markets, focusing on the liability adjustments insurers employ to manage interest rate risk. After the 2008 Financial Crisis, insurers exposed to high interest rate risk -- especially those offered variable annuities with minimum return guarantees pre-2008 -- shifted their product portfolios toward short-duration policies to hedge against rising duration gaps. Using a combination of theoretical and empirical analysis, we show that this liability rebalancing led to sizable contractions in both the supply of long-duration life insurance products and the aggregate life insurance market. Our findings reveal that interest rate risk can significantly influence financial intermediaries' liability choices, which in turn shape the composition and availability of financial products.

Selected Conference Presentations: CICF (06/2025)*, AFA Annual Meeting (01/2026)

*: co-author presentation

Abstract: We study the spatial expansion of banks in response to the banking deregulation of the 1980s and 90s in order to develop a spatial theory of banking. During this period, large banks expanded rapidly, mostly by adding new branches in new locations, while many small banks exited. We document that large banks sorted into the densest markets, but that sorting weakened over time as large banks expanded to more marginal markets in search of locations with a relative abundance of retail deposits. This allowed large banks to reduce their dependence on expensive wholesale funding and grow further. To rationalize these patterns, we propose a theory of multi-branch banks that sort into heterogeneous locations. Our theory yields two forms of sorting. First, span-of-control sorting incentivizes top firms to select the largest markets and smaller banks the more marginal ones. Second, mismatch sorting incentivizes banks to locate in more marginal locations, where deposits are abundant relative to loan demand, to better align their deposits and loans and minimize wholesale funding. Together, these two forms of sorting account well for the sorting patterns we document in the data.

Selected Conference Presentations: Barcelona Summer Forum (2024)* - Society for Economic Dynamics Annual Meeting (2024)* - NBER Summer Institute, International Trade & Investment Workshop (2024)* - Minnesota Macro Conference (2024)* - NFA Annual Meeting (2024) - USC Macro-Finance Conference (2025)

*: co-author presentation

Abstract: With homeowners' insurance market under growing strain owing to increasing climate risks, several jurisdictions have instated and expanded the role of insurers of last resort --- government-backed entities that provide coverage when private markets fail. Using detailed policy-level data and natural disasters as our setting, we examine whether and how these insurers pass on climate risk costs to policyholders. Consistent with our theoretical model, we find that premiums increase significantly in both disaster-affected and unaffected areas following disaster events, while rejection rates rise only in unaffected areas. Spillover effects are heterogeneous and depend on consumers' price sensitivity: in line with price shrouding, less price-sensitive consumers in unaffected areas face higher premiums, while more price-sensitive consumers bear the costs through increased rejection rates. These effects are further shaped by insurers' financial constraints. During constrained periods, insurers raise premiums in both affected and unaffected areas, whereas during unconstrained periods, they primarily increase rejection rates in unaffected areas. Our findings demonstrate that climate risk has contributed to rising premiums over the past two decades and reveal how insurers’ responses redistribute costs and access, impacting homeowners in both high-risk and low-risk areas.

Selected Conference Presentations: Maryland Juniors Finance Conference, AREUEA National Conference (2025), Tilburg Finance Summit (06/2025)*, EFA Annual Meeting (08/2025)*

*: co-author presentation

Abstract: We show that after a quasi-exogenous loss of rent control in Portugal, low-income workers' earnings decline significantly. High-income workers are unaffected, despite both being equally likely to migrate outside the city. We further show that the wage decline stems from transitions to lower-quality jobs outside the city, which we connect to relatively high commuting costs for low-income workers. In particular, the negative impact on wages is driven by individuals who do not own a personal vehicle and rely on public transit for commuting. We explore alternative policies through the lens of a quantitative commuting model with rent control. Our counterfactual analysis examines housing voucher policies, including a recent policy introduced by the Portuguese government. Relative to rent control, housing vouchers reduce taxation on landlords and reduce regional inequality among low-income workers, but only replicate low-income workers' welfare gains if they do not impose implicit mobility restrictions.

Selected Conference Presentations: AREUEA-ASSA Meetings (2025)

Abstract: Regulators often promote financial inclusion by restricting prices. In response, firms may reduce the supply of their product, implying that some households lose from reduced access. This paper explores this trade-off in the context of national price setting in the US life insurance industry. I collect a new data set with over one million insurer-agent links across a subset of US commuting zones and document that poor commuting zones have fewer agents per household, fewer active insurers, and smaller and lower quality insurers relative to rich commuting zones. Motivated by the data, I build a spatial model with multi-region insurers and households with heterogeneous preferences for differentiated life insurance products. The model captures the empirical spatial sorting patterns and admits clear predictions for how insurer location choices change in response to national pricing. I take the model to the data and estimate price elasticities for low- and high-income households. Under flexible pricing, welfare differences between the poorest commuting zones and the richest commuting zone are between 0.4-0.95\% of yearly income, most of which comes from differential access to insurers. National pricing amplifies spatial access disparities due to the geographic reallocation of insurers toward richer markets. Place-based tax policies that target the access margin reduce welfare differences between poor and rich commuting zones by 10.3-20.6\%.

Selected Conference Presentations: NBER Insurance Working Group Meeting (2024) - AFA Annual Meeting (2025) - Northeastern University Finance Conference (2025)

Note: Previously circulated as "Equal Prices, Unequal Access: The Effects of National Pricing in the U.S. Life Insurance Industry"