Bond Market Resiliency: The Role of Insurers

Maureen O’Hara; Andreas C. Rapp; Xing Zhou

doi:10.1093/rfs/hhaf097

Bond Market Resiliency: The Role of Insurers

Maureen O’Hara¹; Andreas C. Rapp²; Xing Zhou³

¹ Johnson College of Business, Cornell University · ² Federal Reserve Board of Governors · ³ Cox School of Business, Southern Methodist University ,

Review of Financial Studies 2026

Abstract We examine the role of insurance companies in supporting resiliency in the corporate bond market. We show that during the COVID-19 liquidity crisis, insurers increased their corporate bond positions, particularly in bonds facing fire sales by mutual funds. Insurers with more stable funding were more likely to buy, and they bought more from dealers with whom they had prior trading relationships. Dealers improved their bond liquidity provision when they had trading relationships with insurers with more stable funding. Our work demonstrates that insurers can play an important role in supporting bond market resiliency during times of stress.

DOI: 10.1093/rfs/hhaf097
Volume: 39 (5)
Pages: 1362-1410
Language: en
Export: BibTeX
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