This page contains an overview of my current working papers and work-in-progress. Comments are welcome.

  • "Biodiversity and financial flexibility"
    Jonas N. Eriksen and Anil Kumar
    Working paper, 2025
    working paper

    Abstract:

    Biodiversity loss and related regulations create material financial risks for firms relying on ecosystem services. We examine whether U.S. public firms adjust their financial flexibility in response to these exposures. Exposed firms improve financial flexibility, primarily by reducing long-term debt. These effects strengthen after the 2021 Kunming Declaration when biodiversity risk becomes salient, particularly among firms that perceive themselves as materially exposed. Responses are concentrated among firms with volatile cash flows, financial constraints, low climate exposure, and greater product-market competition, consistent with precautionary motives. Our results are robust across alternative biodiversity measures, highlighting how biodiversity risk fundamentally shapes corporate decision-making.


  • "Carry trades and debt imbalances"
    Jonas N. Eriksen and Mads M. Kjær
    Working paper, 2026
    working paper

    Abstract:

    We show that the carry trade’s crash and global risk exposures originate from an unpriced borrower-lender mismatch, whereas its risk premium and cross-sectional pricing ability arise from a carry strategy implemented within borrower currencies (debtor carry). The carry trade embeds this mismatch because it buys high-interest-rate borrower currencies and sells low-interest-rate lender currencies. Debtor carry emerges as a priced risk factor in standard SDF tests and is not spanned by existing currency factors. A reduced-form incomplete-spanning model with an intermediary-based exchange rate wedge captures these patterns. Together, these results establish debtor carry as a benchmark for understanding currency risk premia.


  • "Carbon tilts and factor returns"
    Jonas N. Eriksen, Magnus B. Frische, and Niels S. Grønborg
    Working paper, 2025
    working paper

    Abstract:

    Carbon transition risk is increasingly reflected in asset prices and is central to the sustainability debate. We study how carbon risk affects the cross-section of expected U.S. equity factor returns using carbon tilts, defined as the value-weighted difference in carbon transition risk between a factor’s long and short legs. While carbon-intensive factors earn lower realized returns, forward-looking expected returns based on the implied cost of capital indicate a positive carbon tilt premium that increases with unanticipated climate concerns and over time. Carbon risk varies across investment styles and is most pronounced for strategies linked to profitability, investment, and valuation.


Work-in-progress

  • Currency Imbalances in Global Banks and the Dollar (with Anders M. Posselt and Mads M. Kjær)
  • Dissecting the biodiversity risk premium