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Financial Intermediation of Long-Term Savings

Objective

Against a backdrop of population aging and secular decline in interest rates, traditional state and occupational pension systems are under stress, forcing households to increasingly rely on their own savings and to bear financial markets risk. Financial intermediaries increasingly take up the role of collecting and investing households’ long-term savings. In the EU, household savings intermediated by life insurers amount to 8 trillion euros or 22% of aggregate household financial wealth. Moreover, life insurers are not pass-through intermediaries: They actively provide households with insurance against market risk through intergenerational risk sharing mechanisms and return guarantees.

I will use a combination of unique regulatory data, empirical designs grounded in theory (existing and that I will develop), and careful identification strategies, to understand the role of life insurers in intermediating households’ long-term savings and providing them with insurance against financial markets risk. I will study how savings products embedding such insurance share aggregate risk between households and intermediaries, and between different cohorts of households. I will analyze the impact of these risk sharing arrangements on the supply of capital to the real economy. I will assess the impact of competition between financial intermediaries and the impact of capital constraints on the provision of insurance against aggregate risk and on the build-up of systemic risk in the insurance sector. On the way, I expect to contribute to the policy debates on the financing of retirement and the regulation of financial intermediaries.

Call for proposal

ERC-2020-COG
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Funding Scheme

ERC-COG - Consolidator Grant

Host institution

ETABLISSEMENT D'ENSEIGNEMENT SUPERIEUR CONSULAIRE HAUTES ETUDES COMMERCIALES DE PARIS
Address
Avenue De La Porte Champeret 8
75017 Paris
France
Activity type
Higher or Secondary Education Establishments
EU contribution
€ 875 000

Beneficiaries (1)

ETABLISSEMENT D'ENSEIGNEMENT SUPERIEUR CONSULAIRE HAUTES ETUDES COMMERCIALES DE PARIS
France
EU contribution
€ 875 000
Address
Avenue De La Porte Champeret 8
75017 Paris
Activity type
Higher or Secondary Education Establishments