Date: Jun.18, 2020

Time: 9:30-11:00

Speaker: HUANG Zongbo

Venue: ZOOM Conference

ID: 612 8860 2385

Please note “name-school” when you join the meeting.

[Speaker Intro]

Huang Zongbo joined the Chinese University of Hong Kong, Shenzhen Campus in 2017. He is currently an assistant professor in Finance. He was awarded his Ph.D. in Economics by Princeton University. His research focuses on corporate finance and macro-finance with special emphasis on the real effects of financial frictions.

【Abstract】

The shadow banking literature is anchored on the premise that shadow banking intensifies financial risks through its connection with regular banks. We document the importance of implicit guarantees as the risk transmission channel using a detailed micro-level data set on wealth management products, which are the most prominent shadow banking products in China. We find that when the risk perception of a bank increases, the bank extends stronger implicit guarantees to the investors of wealth management products to safeguard its reputation. Stronger guarantees incur more expenses, thus amplifying impacts of negative shocks to the related regular banks. The expenses account for a significant reduction in bank profits. Our results suggest a higher risk-weight for off-balance-sheet exposures for riskier banks.