Helena Palma Carvalho
Helena Palma Carvalho
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About me
About me
My research focuses on banking competition and regulation, using both theory and empirics. My research interests include financial intermediation, corporate finance, and industrial organization.
I'm a PhD student in Financial Economics at University College London, a research intern at the Bank of England’s Research Hub, and an IFS scholar. My supervisors are Saleem Bahaj and Frederic Malherbe.
Before starting my PhD, I worked in the Financial Stability Department at Banco de Portugal and studied at the London School of Economics and Católica Lisbon.
Research
Research
Depositor inertia and bank market power
Summary: Depositors don’t need a reason to stay - they just don’t feel like moving. This paper investigates how depositor inattention, as well as search and switching costs, create deposit market power for banks. I develop and estimate a dynamic structural model featuring heterogeneous frictions across depositor types, defined by financial literacy and wealth. The model reveals a core ambiguity: frictions can either dampen or intensify competition, depending on their magnitude and the initial distribution of market shares. Counterfactual simulations explore the effects of reducing switching and search costs, raising financial literacy, and addressing wealth inequality, on deposit pricing, market structure, and competition dynamics.
Early stage work, draft not available.
Suboptimal lending with deposit insurance
Summary: This paper develops a theory of how deposit insurance shapes banks’ lending decisions when deposit supply is not perfectly elastic. Expanding deposit insurance coverage can lead to either excessive or insufficient lending, depending on the banks’ marginal source of funding. Deposit insurance acts as an implicit subsidy that lowers the cost of insured funding. When marginal lending is deposit-funded, this subsidy induces risk-shifting and excessive lending; when marginal lending is wholesale-funded, it creates an overhang problem that leads banks to pass up profitable loans. Evidence from U.S. bank- and mortgage-level data is consistent with the model mechanism.
Presented at: FDIC 24th Annual Bank Research (September 25, 2025); UZH Rising Scholar Conference in Finance (July 10, 2025); Sveriges Riksbank and CeMoF 4th PhD Workshop in Money and Finance (April 29, 2025); HEC Liège HYRCE Young Researchers Conference in Economics (April 18, 2025); UK Women in Finance Workshop (March 13, 2025).
Link here
The solvency and funding cost nexus - the role of market stigma for buffer usability
Abstract: In this paper, we investigate the relationship between the banks’ solvency ratio and their funding costs using a proprietary dataset from Banco de Portugal for 21 Portuguese banks from 2006 to 2020. In light of the discussion on impediments to capital buffer usability by banks, we focus on the importance of market discipline to this relationship. Our results suggest that the relationship between solvency and funding costs is negative and state-dependent, i.e. market participants become more sensitive to changes in solvency during economic downturns. The relationship is stronger for market-based financing sources in comparison to deposits. Finally, we use a breakpoint analysis and find that investors are more likely to penalize the same absolute deterioration in solvency levels when banks are already in a fragile position. Our findings support the hypothesis that fear of market stigma may make banks reticent to use buffers in times of stress.
Link here
Teaching
Teaching
Corporate Finance, MSc Finance, 2023/2024 - Support teaching assistant and grader
Introduction to quantitative finance, MSc Finance, 2023/2024 - Support teaching assistant and grader
Advanced quantitative finance, MSc Finance, 2023/2024 - Support teaching assistant
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