Campbell, John Y.Greenwood, RobinCohen, Lauren H.Sunderam, AdiLiu, Weiling2019-12-122019-052019-05-032019Liu, Weiling. 2019. Essays on Financial Intermediaries and Market Frictions. Doctoral dissertation, Harvard University, Graduate School of Arts & Sciences.http://nrs.harvard.edu/urn-3:HUL.InstRepos:42029650Even the largest, most sophisticated intermediaries face limitations due to market frictions. In my dissertation, I study the impact of these frictions in a variety of settings, ranging from the U.S. bond market to the insurance market. In the bond market, I find that when intermediaries hit risk limits on their balance sheets, the market compensates them for bearing additional risk with higher expected long-run returns. In the insurance market, when companies face political frictions, I find that they are less likely to adjust prices and more likely to reduce supply of insurance in the future. Finally, in Treasury auctions, I find that due to dealers' limited capacity to absorb inventory, the supply of Treasuries sold at auction creates a repeated, intraday price pressure effect. Because intermediaries connect financial markets to consumers, the study of their constraints unveils important market dynamics that impact regulators, consumers, as well as practitioners.application/pdfenFinance, economics, financial intermediaries, asset pricing, risk exposure, empirical finance, insurance, long-term careThesis or Dissertation2019-12-12