Johan Hombert Wins European Research Council Grant

Johan Hombert, professor of finance at HEC Paris, has been selected for a European Research Council (ERC) Consolidator Grant, making HEC Paris recipient of two ERC grants in 2020, and three in total.

In early 2020, Bruno Biais, professor in the same department, was also rewarded a grant from the ERC ("Advanced" and not "Consolidator"). Johan Hombert is one of the only laureates in France in the Human and Social Sciences category, along with Eduardo Perez, professor of economics at SciencesPo.

The European Research Council is a public body devoted to the funding of scientific and technological research conducted within the European Union. Every year, the ERC awards highly prestigious grants to top researchers worldwide for their frontier research. In general, these grants are the largest personal research grants available in the European Union. 

The ERC Consolidator Grants are dedicated to mid-career researchers in any field who want to consolidate their independence by establishing a research team and continuing to develop a successful career in Europe. 

The 327 winners will carry out their projects in institutions in 23 countries in Europe. Germany and the United Kingdom host the greatest number of winners (50 in each), followed by France, (in third place with 34) and the Netherlands (29). For the first time, a project based in Ukraine, a Horizon 2020 “Associated” country, will also be funded by a Consolidator Grant.

In December, 37% of grants were awarded to female researchers, the highest proportion since the start of the Consolidator Grant program. 

Abstract of the research project awarded by the ERC:

Against a backdrop of an aging population and secular decline in interest rates, traditional state and occupational pension systems are under stress, forcing households to increasingly rely on their own savings and to bear financial markets risk. Financial intermediaries increasingly take up the role of collecting and investing the households’ long-term savings. In the EU, household savings intermediated by life insurers amount to 8 trillion euros or 22% of aggregate household financial wealth. Moreover, life insurers are not pass-through intermediaries: they actively provide households with insurance against market risk through intergenerational risk sharing mechanisms and return guarantees.

I will use a combination of unique regulatory data, empirical designs grounded in theory (existing and that I will develop), and careful identification strategies, to understand the role of life insurers in intermediating households’ long-term savings and providing them with insurance against financial markets risk. I will study how savings products embedding such insurance share aggregate risk between households and intermediaries, and between different cohorts of households. I will analyze the impact of these risk sharing arrangements on the supply of capital to the real economy. I will assess the impact of competition between financial intermediaries and the impact of capital constraints on the provision of insurance against aggregate risk and on the build-up of systemic risk in the insurance sector. On the way, I expect to contribute to the policy debates on the financing of retirement and the regulation of financial intermediaries.

Learn more about Johan Hombert’s research, explained on Knowledge@HEC here.