Avinash Sattiraju

Bio

I am a PhD candidate in Finance at the Olin Business School, Washington University in St. Louis. My primary research interests are in asset pricing, financial intermediation, and macroeconomics. I am also interested in entrepreneurial finance and spatial economics. Before joining the doctoral program, I worked as a Research Associate at the Federal Reserve Bank of Kansas City.

Education

• Washington University in St. Louis
  Olin Business School
  Degree: PhD in Finance
  (2023 - current)
• The University of Texas at Austin
  Degree: MA in Economics
  Graduated: 2020
• Indian Institute of Space Science and Technology
  Degree: Bachelor's in Electronics and Communications Engineering (Avionics)
  Graduated: 2019

Working Papers

• Intermediaries and Expected Returns

  with Steve Wu, June 2026.

  Abstract

  We develop an option-implied measure of the equity premium motivated by intermediary asset pricing. Modifying the framework of Martin (2017), we replace the market's risk-neutral variance with the risk-neutral covariance between the aggregate market and intermediary equity. We estimate this intermediation bound using index (SPX) and financial-sector (XLF) options. Empirically, the bound's performance is highly state-dependent: it closely tracks the market baseline in calm periods but separates sharply during financial distress. Consequently, the intermediation bound delivers substantial out-of-sample forecasting gains for one-year-ahead market returns, with outperformance concentrated almost entirely during periods of impaired risk-bearing capacity of financial intermediaries. Event-study evidence from a bank recapitalization event provides further support for bank net worth mattering for aggregate asset prices. Ultimately, our results demonstrate that intermediary option prices provide a real-time, forward-looking gauge of expected returns exactly when they are most useful to policymakers: financial crises.

• Monetary Policy and Bank Credit Quality

  with A. Thakor and F. Song, June 2026.

  Abstract

  We develop a theoretical model of bank credit supply in which monetary policy affects bank credit quality and test its predictions with U.S. bank data. The predictions that we test and find support for are as follows. First, rate cuts make it profitable for banks to continue distressed loans under deposit insurance, even when expected returns are negative (zombie lending). Banks that take more interest rate risk—those with a higher income gap—are more susceptible to this distortion. A 100-basis-point easing shock raises troubled debt restructurings (TDR) by $28 million over the following year for the average bank moving from the 25th to the 75th income gap percentile, and a one percentage point higher TDR share predicts 9.2 basis points more nonperforming loans one year later. Second, anticipated rate cuts induce banks to relax loan screening standards. A one-standard-deviation forward-guidance easing shock reduces net tightening in business lending standards by 2.8 percentage points after one quarter, and standards loosen even after controlling for loan demand.

• Measuring the Stochastic Discount Factor in the Tails

  with J. Brown, N. Çakır Melek, and J. Matschke. New version coming soon. Old draft available here .

  Abstract

  We introduce a simple statistic, “Relative Accuracy,” that evaluates the accuracy of a distribution over its entire range. Within the context of the options literature, the statistic provides granular insights on the stochastic discount factor in the tails of the distribution and avoids the estimation of the physical distribution. We apply the statistic to two markets. For S&P 500 options, we find that option-implied probabilities are high in the left tail, which is commonly interpreted as an insurance premium against downside risk. However, implied probabilities for sharp oil price declines are too low relative to the data, suggesting that far out-of-the-money oil put options are cheap. To support our statistical result, we highlight that investors in the oil market were able to make a notable positive return by buying deep out-of-the-money put options, indicating a potential mispricing of downside risk in this market.

Policy Papers

• Capital Flows and Monetary Policy in Emerging Markets around Fed Tightening Cycles with Alice von Ende-Becker and Johannes Matschke, October 2023.
• Will High Underlying Inflation Persist? with Amaze Lusompa, May 2023.
• To Reach the Fed's Inflation Target, Interest Rates May Have to Remain Restrictive for Some Time with Johannes Matschke, June 2023.
• Price Pressures for U.S. Exporters and a Strong Dollar Have Increased Inflation in Foreign Countries with Johannes Matschke, August 2022.
• Recent Appreciation in the U.S. Dollar Unlikely to Have Large Effect on Domestic Inflation with Johannes Matschke, August 2022.
• Cutting-Edge Methods Did Not Improve Inflation Forecasting during the COVID-19 Pandemic with Amaze Lusompa, June 2022.
• Labor Markets Are Tight, but Conditions Vary across States with Johannes Matschke, December 2021.