Topic: Risk-taking with Financing Constraints

Lecturer: Renbin Zhang  

Associate Professor, School of Economics, Shandong University. In 2020, he graduated from the Autonomous University of Barcelona with a PhD in economics. His research interests mainly include macroeconomics and macrofinance. His research has been published in the Journal of Monetary Economics, Journal of Economic Behavior and Organization. Chaired the National Natural Science Foundation Youth Project.

Abstract:

We study the impact of liquidity constraints onfirms' risk-taking that depends on leveraged returns and volatility.We show that an easier liquidity condition may or may not encourage risk-taking. Following aninterest-rate cut. fewer firms take risks if theycan take a low leverage, but more firms take risks if they take a high leverage.Therefore, in the aggregate, one can observe anon-monotone hump-shaped relationship between the interest rate and firm-return volatlitv. The optimal reat interest rate should depend on the measure of returnspillover, Still, a calibrated version shows that the interest rate should be kept low for allocation efficiency The model also imolies an ootimal policy mix of interest rateand non-monotone leverage concerning riskspillover.

Time: April 11, 2024 12:15-13:15

Venue: B321,Zhixin Building,Central Campus