Research
Publications
Inequality and Finance: The Role of Economic Literacy, with C. Vasilakis - accepted for publication in the Journal of Financial Literacy and Well-Being
The finance-inequality nexus is central to understanding cross-country income disparities, yet the evidence on whether financial development raises or lowers inequality remains mixed. This paper asks whether economic literacy, a population’s capacity to understand and use financial services, conditions that relationship. Using a panel of forty-eight countries over the 1995-2008 period and System GMM estimation that addresses the endogeneity of financial development, we find that financial development is positively associated with income inequality, but that this effect is significantly mitigated where economic literacy is higher. At low levels of economic literacy, financial development increases inequality; as literacy rises the effect weakens, and at sufficiently high levels it may become negligible. The moderating effect is negative and significant under two independently constructed measures of economic literacy: a survey-based index and an objective metric. It therefore does not depend on how literacy is measured. The result also holds under an alternative measure of financial development, a reduced instrument set, and controls for institutional quality. The findings identify economic literacy as a complement to financial development through which the distributional gains from finance can be more widely shared.
Chasing Megatrends or Managing Risk? Agency Dynamics in Thematic Investing, with P. Mourdoukoutas - Journal of Investing 2026
Thematic exchange-traded funds (ETFs) have become a popular vehicle for gaining exposure to innovation and structural trends. This paper studies how daily net flows, returns, and volatility interact in thematic equity ETFs across low- and high-volatility market conditions. Using daily data on more than forty funds, we find clear return chasing: inflows follow recent performance, but the flow–performance sensitivity declines as fund volatility rises and is further dampened when aggregate market volatility is elevated. We find no evidence that investors disproportionately chase extreme winners in turbulent periods; instead, performance-based reallocations become more restrained. Finally, inflows are followed by modest increases in subsequent fund volatility, though this risk response is muted in high-volatility markets. Overall, the results suggest that thematic ETFs behave less like persistent alpha vehicles and more like high-volatility, growth-tilted factor exposures, implying a need for explicit risk budgeting and monitoring for risk drift.
CEO Gender and Firm Performance during the COVID-19 pandemic, with C. I. Giannikos and J. Lou - Applied Finance Letters, 2024
The COVID 19 pandemic precipitated an unprecedented deceleration of economic activities and a stock market crash. The unparalleled shock and the altered risk attitudes present a distinctive opportunity to examine whether the well-established concept of the “glass ceiling” is indicative of latent gender differentials in company performance. Utilising US financial data, the study employs a range of methodologies to examine whether firms led by female CEOs exhibited the same performance as firms led by male CEOs during 2020-2021. Our empirical results confirm previous findings from the finance literature, as we neither find a systematic difference in returns to holding stock in female-led firms, nor a difference in accounting returns between female-led and male-headed firms.
The Importance of Income Uncertainty on the Relationship of Inequality with the Equity Risk Premium, with C. I. Giannikos and H. Guirguis - International Journal of Business and Economics, 2024
We empirically investigate the relationship between the equity risk premium, income inequality, and income uncertainty in the US economy over the period 1968-2019. Our model involves the examination of dynamic time-varying parameter responses of income inequality to income uncertainty shocks, while controlling for relevant economic and financial indicators. We also allow the relationship between income inequality and the premium to respond asymmetrically to high and low, as well as positive and negative changes in income uncertainty. Our results reveal that income inequality persistently increases the equity premium, regardless of the level of income uncertainty. However, income uncertainty reduces the positive effect of inequality on the premium only for high-income uncertainty, as it does not have any effect for low-income uncertainty.
Inequality, premium and the timing of resolution of uncertainty, with C. I. Giannikos, Finance Research Letters, 2024
We incorporate Epstein-Zin preferences in an exchange economy with income uncertainty and examine the effect of inequality on the equity risk premium. When agents have preference for late resolution of uncertainty, inequality increases the premium for low income uncertainty and decreases the premium for large income uncertainty. When agents have preference for early resolution of uncertainty, inequality increases the equity premium even when the level of income uncertainty is large. Our results suggest that the time preference for resolution of uncertainty has an important effect on income uncertainty, which subsequently affects the relationship of inequality with the equity risk premium.
A study of the effectiveness of governmental strategies for managing mortality rate from COVID-19, with W. Clyde and A. Kakolyris, Eastern Economic Journal, 2021
We investigate the effectiveness of seven government containment and policy closure interventions against the novel coronavirus (SARS-COV-2) pandemic in the OECD countries, at several different time horizons. Our results indicate that only school closings and public transportation closings have a persistently significant impact. Stay at home policies only show a significant impact after 70 days. Workplace closings, restrictions on the size of gatherings, and restrictions on internal travel show no significant impact on mortality rates. Moreover, stricter measures are not significantly associated with lower growth rates in mortality.
Equity Premium with Habits, Wealth Inequality and Background Risk, with C. I. Giannikos, Journal of Risk and Financial Management, 2021
In an exchange economy with endowment inequality, we investigate how preferences with external habits affect the equity risk premium. We show that the dynamics of external additive habits with wealth inequality are complex when a background risk is present. It is ambiguous whether wealth inequality will increase or decrease the equity premium even when the income uncertainty is low. This result extends literature by suggesting that wealth inequality has a small role in explaining asset pricing puzzles.
Habits, Wealth and Equity Risk Premium, with C. I. Giannikos, Finance Research Letters, 2021
We investigate how external habits affect the equity risk premium in an exchange economy with identical agents, except for their initial endowment. Wealth inequality is introduced with a mean-preserving transfer of endowment. We show that, when external habits are present and the absolute risk tolerance of agents is convex (concave), wealth inequality will decrease (increase) the equity risk premium. Furthermore, we find that as external habits increase, the equity risk premium increases (decreases) if agents exhibit convex (concave) absolute risk tolerance.
Selected Working Papers
Stock Market Concentration and the Distributional Impact of Financialization, with C. Angelopoulos
FDI, Growth and Innovation: The Role of Culture, with C. Vasilakis
Noise Trader Model in a Production Economy, with C. I. Giannikos and A. Kakolyris
Other Papers and Writings
City Size Distributions: A Survey on Zipf’s Law and Central Place Theory