Sasha Indarte

Sasha Indarte
  • Assistant Professor of Finance

Contact Information

  • office Address:

    2452 Steinberg-Dietrich Hall
    3620 Locust Walk
    Philadelphia, PA 19104

Research Interests: Household Finance, Financial Intermediation, Macroeconomics

Links: Personal Website, CV

Research

  • Sasha Indarte, Bad News Bankers: Underwriter Reputation and Contagion in Pre-1914 Sovereign Debt Markets.

    Abstract: This paper uses new bond-level data on sovereign borrowing and defaults during 1869-1914 to quantify a channel of contagion via banks’ reputation for monitoring borrowers. Concerns over reputation incentivized Britain’s merchant banks (who underwrote sovereign bonds) to monitor and exert influence over sovereigns. Default signaled to investors that a bank was less willing or able to write and support quality issues, indicating that its other bonds may underperform in the future. Consistent with reputation-based contagion, I find that comovement between defaulting and non-defaulting bonds is six times larger when the bonds share an underwriter. To isolate the causal effect of a shared underwriter, I exploit within-country variation in bonds’ underwriters. Testing predictions from a dynamic game where underwriters build a reputation for monitoring, I find further evidence supporting reputation as the mechanism – as opposed to alternative explanations such as wealth effects. These findings highlight that the reputation of intermediaries that monitor and intervene in crises can be a powerful source of contagion unrelated to a borrower’s fundamentals.

  • Sasha Indarte, Moral Hazard versus Liquidity in Household Bankruptcy.

    Abstract: This paper studies the role of moral hazard and liquidity in driving household bankruptcy. First, I estimate that increases in potential debt forgiveness have a positive, but small, effect on filing using a regression kink design. Second, exploiting quasi-experimental variation in mortgage payment reductions, I estimate that filing is five times more responsive to cash-on-hand than relief generosity. Using a sufficient statistic, I show the estimates imply large consumption-smoothing benefits of bankruptcy for the marginal filer. Finally, I conclude 83% of the filing response to dischargeable debt comes from liquidity effects rather than a moral hazard response to financial incentives.

  • Sasha Indarte, Financial Crises and the Transmission of Monetary Policy to Consumer Credit Markets.

    Abstract: How does creditor health impact the pass-through of monetary policy to households? Using data on the universe of US credit unions, I document that creditor asset losses increase the sensitivity of consumer credit to monetary policy. Identification exploits plausibly exogenous variation in asset losses and high-frequency identification of monetary policy shocks. Weaker lenders can respond more if they face financial frictions that easing alleviates. The estimates imply constraints on monetary policy become more costly in financial crises featuring creditor asset losses, and that an additional benefit of monetary easing is that it weakens the causal, contractionary effect of asset losses.

  • Sasha Indarte and Gideon Bornstein, The Impact of Social Insurance on Household Debt.

    Abstract: This paper investigates how the expansion of social insurance affects households’ accumulation of debt. Insurance can reduce reliance on debt by lessening the financial impact of adverse events like illness and job loss. But it can also weaken the motive to self-insure through savings, and households’ improved financial resilience can increase access to credit. Using two quasi experimental research designs, we estimate the causal effect of expanded insurance on household debt, exploiting the staggered expansions of one of the largest US social insurance programs: Medicaid. We find that expanding Medicaid increased credit card borrowing by 2.2%. Decomposing this effect in a model of household borrowing, we show that increased credit supply in response to households’ improved financial resilience fully accounts for this rise in borrowing and contributed to 17% of the total welfare gains of expanding Medicaid.

Teaching

Current Courses (Fall 2022)

  • FNCE1000 - Corporate Finance

    This course provides an introduction to the theory, the methods, and the concerns of corporate finance. The concepts developed in FNCE 1000 form the foundation for all elective finance courses. The main topics include: 1) the time value of money and capital budgeting techniques; 2) uncertainty and the trade-off between risk and return; 3) security market efficiency; 4) optimal capital structure, and 5) dividend policy decisions. ACCT 1010 + STAT 1010 may be taken concurrently.

    FNCE1000006 ( Syllabus )

    FNCE1000005 ( Syllabus )

    FNCE1000004 ( Syllabus )

    FNCE1000003 ( Syllabus )

All Courses

  • FNCE1000 - Corporate Finance

    This course provides an introduction to the theory, the methods, and the concerns of corporate finance. The concepts developed in FNCE 1000 form the foundation for all elective finance courses. The main topics include: 1) the time value of money and capital budgeting techniques; 2) uncertainty and the trade-off between risk and return; 3) security market efficiency; 4) optimal capital structure, and 5) dividend policy decisions. ACCT 1010 + STAT 1010 may be taken concurrently.

  • FNCE6110 - Corporate Finance

    This course serves as an introduction to business finance (corporate financial management and investments) for both non-majors and majors preparing for upper-level course work. The primary objective is to provide the framework, concepts, and tools for analyzing financial decisions based on fundamental principles of modern financial theory. The approach is rigorous and analytical. Topics covered include discounted cash flow techniques; corporate capital budgeting and valuation; investment decisions under uncertainty; capital asset pricing; options; and market efficiency. The course will also analyze corporate financial policy, including capital structure, cost of capital, dividend policy, and related issues. Additional topics will differ according to individual instructors.

Awards and Honors

  • National Science Foundation Grant (for “The Origins of Serial Sovereign Default”), 2021
  • Wharton Teaching Excellence Award (for FNCE 611, MBA Corporate Finance), 2020
  • NBER Small Grants for Household Finance Research (for “Explaining Racial Disparities in Personal Bankruptcy Outcomes”), 2020
  • Rodney L. White Center Research Grant (for “The Impact of Social Insurance on Household Debt”), 2020
  • Macro Financial Modeling Initiative Dissertation Fellowship, Becker Friedman Institute, 2017
  • Susan Schmidt Bies Prize for Doctoral Student Research on Economics and Public Policy, Northwestern University (for “Bad News Bankers: Underwriter Reputation and Contagion in Pre-1914 Sovereign Debt Markets”), 2016

In the News

Knowledge at Wharton

Wharton Stories

Activity

In the News

How Bankruptcy Bias Contributes to the Racial Wealth Gap

New research from Wharton’s Sasha Indarte shows the role that bias plays in bankruptcy and the racial wealth gap in the U.S.Read More

Knowledge at Wharton - 9/20/2021
All News

Wharton Stories

Get to Know the 20 New Faculty Members Joining Wharton This Year

This upcoming academic year, the Wharton School will welcome 20 new faculty members. These brilliant minds are leading experts in a wide range of fields, including business, social science, finance, economics, public policy, management, marketing, statistics, real estate, and operations. One of the most exciting additions to the Wharton community…

Wharton Stories - 08/17/2020
All Stories