Helena Palma Carvalho
Helena Palma Carvalho
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About me
About me
My research focuses on financial intermediation. It combines theory and empirics to examine how funding, competition, and regulation shape intermediation capacity. My work spans traditional retail banking and dealer intermediation in global derivatives markets.
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
The bank as a multiproduct firm
Summary: Banking is a multi-product, multi-period market. Households form long-term relationships with a main bank, which then supplies a bundle of current accounts, savings, and loans. Using transaction-level data, I document substantial inertia in main-bank choice and strong clustering of add-on products within the same provider. I estimate a dynamic model in which households face switching costs for their main account and derive additional utility from holding multiple products with the same bank. Over time, banks choose between investing in future relationships or harvesting existing customers. Across products, they decide how aggressively to price the main account relative to the add-ons. Counterfactuals examine how data portability, Open Banking, and financial literacy shape product pricing, competition, and monetary-policy transmission.
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: SRB Economic Conference 2026 (March 18, 2026); 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).
Awards: Finalist, Resolution Young Researcher Award (March 18, 2026);
Link here
The solvency and funding cost nexus - the role of market stigma for buffer usability
Summary: 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
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