Hello, I'm Umang.

I am a finance PhD candidate at the University of Iowa, and an academic visitor at the Bank of England. My research interests include financial intermediation, asset pricing, market microstructure, and household finance.

I am on the 2025-26 job market! Here's my CV.

My job market paper examines frictions in cross-border U.S. dollar liquidity. I show that when conventional funding falls short, global banks turn to synthetic markets, combining foreign currency deposits with foreign exchange swaps, to raise dollars. Banks’ demand for synthetic dollars, however, affects swap prices and ultimately raises the cost of dollar intermediation.

My other papers explore the role of financial intermediaries in over-the-counter markets, and information asymmetries in non-intermediated markets.

I spent Fall 2024 at the Harvard Business School and Summer 2025 at the Bank for International Settlements, Switzerland. Before graduate school, I worked at the Fixed Income and Foreign Exchange Markets division of J.P. Morgan, and graduated from the Indian Institute of Management.

Email: umang-khetan@uiowa.edu

Research Papers

[1] Synthetic Dollar Funding

Select presentations: CFTC (invited), Bank for International Settlements (invited), Fed Board Short-Term Funding Markets, Office of Financial Research PhD Symposium, Federal Reserve Bank of Atlanta (joint with Georgia State University), European Central Bank, University of Zurich, Midwest FA, Northern FA, European FA (DT), FMA, AFA 2025 poster

Grants/awards: Best paper at the European FA doctoral tutorial; Travel grants from the AFA, MFA, EFA and NFA

Abstract (click here):

I study how funding market frictions shape the pricing and availability of U.S. dollar credit. Firms worldwide rely on global banks for dollar credit. Yet, post-financial crisis regulations have restricted banks’ access to conventional wholesale funding sources. Using comprehensive transaction-level data across major funding markets, I show that foreign exchange swaps emerge as a key alternative when wholesale funding dries up. Swaps allow banks to convert foreign currency funds into U.S. dollars, creating a supply of synthetic dollars while hedging currency risk. However, this workaround is not costless: as suppliers of synthetic dollars face balance sheet costs, swap prices increase with demand. I find that a 10% rise in banks’ demand raises the relative price of synthetic dollars by 7 bps, providing a novel demand-driven mechanism for persistent violations of covered interest parity - a fundamental no-arbitrage condition. Through the lens of a bank funding model calibrated to my estimates, I show that the resulting increase in intermediation costs ultimately disrupts the availability of dollar credit. My findings illustrate how funding frictions threaten dollar dominance in the international financial system.

This figure correlates the dollar funding gap of non-US banks (excess of dollar assets over liabilities, in black) with deviations from covered interest parity (CIP, in brown). When non-US banks face frictions in sourcing US dollars from wholesale funding markets, they turn to the foreign exchange swap market, which widens deviations from CIP.

[2] The Market for Sharing Interest Rate Risk: Quantities and Asset Prices

Co-authors: Jian Li, Ioana Neamtu, Ishita Sen

Revise & Resubmit: Review of Financial Studies

Select presentations: AFA, NBER Financial Market Frictions and Systemic Risks, NBER Long-Term Asset Management, European FA, SFS Cavalcade North America, Office of Financial Research Rising Scholars, FIRS, FMA CBOE Derivatives & Volatility, Midwest FA, Indiana University, Princeton, Columbia, Bank of Canada, Bank of England, Swiss National Bank, Fed Board, AFA 2024 poster

Grants/Awards: Outstanding Paper in Asset Management at MFA; Inquire Europe Research Grant; AFA PhD Travel Grant

Coverage: Bank Underground

Abstract (click here):

We provide the first comprehensive characterization of end-user demand and its asset pricing implications for the interest rate swap market. Pension funds and insurers act as natural counterparties to banks and corporations, but their demand is highly segmented by maturity, exposing dealers to maturity-specific imbalances. We estimate demand elasticities using portfolio compression as an instrument, and calibrate a preferred-habitat model to quantify how demand imbalances interact with intermediary constraints to shape the term structure of swap spreads. In policy counterfactuals, we quantify the cross-sector implications of changing hedging mandates, e.g., showing that a decrease in pension funds’ demand worsens banks’ hedging outcomes.

This figure shows that pension funds and insurers (in green) receive fixed rates using interest rate swaps. On the other hand, banks (in grey) and corporations (in light purple) pay fixed rates. Opposite exposures makes these institutions natural counterparties in the swap market. However, we find a stark maturity segmentation, which strongly impacts asset prices.

[3] Uninformed yet Consequential: Liquidity Shocks in FX Markets

Co-author: Petra Sinagl

Select presentations: Western Finance Association (WFA), 4th Future of Financial Information Conference, Central Bank Conference in Microstructure of Financial Markets, University of Missouri

Grant: Tippie Research Excellence Grant, 2021

Abstract (click here):

We study how retail liquidity shocks impact prices and volumes in the foreign exchange (FX) spot market. We model risk-averse dealers' accumulation of inventory under asymmetric information and incomplete offset across retail clients. Our model predicts that retail liquidity shocks result in inventory imbalances that are transmitted to the inter-dealer segment, increasing price volatility and trading volumes. Using month-end settlement breaks to instrument for uninformed order flow, we empirically validate these predictions: a one-standard-deviation rise in retail net volume increases volatility by 12-22% and inter-dealer volume by 10%, indicating that liquidity-driven demand interacts with intermediary constraints to determine asset prices.

This figure shows that corporate order flow imbalance (absolute of buy minus sell volume) jumps two days before a month-end, in response to a "T+2" settlement cycle in the FX spot market.

[4] Unemployment Insurance Fraud in the Debit Card Market

NBER Working Paper #32527

Co-authors: Jetson Leder-Luis, Jialan Wang, Yunrong Zhou

Revise & Resubmit: AEJ: Economic Policy

Select presentations: American Economic Association (AEA), NBER Public Economics, NBER Innovative Data in Household Finance Conference, MIT Rising Scholars Conference, Georgetown University, Midwest FA

Abstract (click here):

We study fraud in the unemployment insurance (UI) system using a dataset of 35 million debit card transactions. We apply machine learning techniques to cluster cards corresponding to varying levels of suspicious or potentially fraudulent activity. We then conduct a difference-in-differences analysis based on the staggered adoption of state-level identity verification systems between 2020 and 2021 to assess the effectiveness of screening for reducing fraud. Our findings suggest that identity verification reduced payouts to suspicious cards by 27%, while non-suspicious cards were largely unaffected by these technologies. Our results indicate that identity screening may be an effective mechanism for mitigating fraud in the UI system and for benefits programs more broadly.

This figure shows that unemployment insurance benefits disbursed to suspicious cards declined after the introduction of identity verification measures.

[5] Innovation Specificity

Co-authors: Jon A. Garfinkel, Amrita Nain

Select presentations: Midwest FA, Northern FA, Eastern FA, FMA, University of Iowa

Abstract (click here):

We study the specificity of corporate innovation. Process patents are more specific to the inventing firm. They tend to arise at higher-cost firms, they are more likely to cite past patents of the focal firm and be undertaken by inventors with more focal-firm patenting experience. High process-patent-oriented firms are also less likely to be acquired, but this effect is reversed when there is strong textual overlap between process patent descriptions and the acquirer’s product descriptions. Cost-reduction synergies are greater in such cases as well. Withdrawn attempts to acquire process-oriented targets are followed by increased bidder internal process patenting.

This figure shows that patents that seek to achieve process improvements, as opposed to the creation of new products, constitute 20-30% of all patents filed in the United States.