Postdoctoral Wang Xiaoxiao’s Research on the Impact of Commercial Banks’ Shareholding in Fund Companies on Fund Timing Ability Accepted by International Top Finance Journal

Recently, the paper Bank affiliation and timing ability of mutual funds: Evidence from China, written by Postdoctoral Wang Xiaoxiao from the School of Economics, Shandong University as the first author, was officially accepted by Journal of Banking and Finance, an international top journal in finance. The co-author is Professor Zhang Xueyong from the School of Finance, Central University of Finance and Economics.

This paper analyzes the impact of commercial banks’ shareholding in fund companies on the multi-dimensional timing ability of mutual funds. Contrary to the research results in developed markets, based on China’s transitional background, this study finds that the performance of bank-affiliated funds is better than that of non-bank-affiliated funds. Using a sample of 3,351 Chinese equity and hybrid mutual funds from 2008 to 2019, the study finds that compared with non-bank-affiliated funds, bank-affiliated funds have better timing ability, which explains their superior performance. A potential mechanism is that due to the unique position of China’s state-owned commercial banks in the financial system and monetary policy transmission, their affiliated funds benefit from information advantages. Further research finds that better timing ability will in turn feed back to commercial bank groups, indicating that incentive compatibility can be achieved between commercial banks and their affiliated funds. A quasi-natural experiment on changes in the equity structure of fund companies (fund companies changing from being controlled by non-bank financial institutions to commercial banks) verifies the causal interpretation of these findings. Finally, the findings of this paper remain valid in a series of robustness tests.

Wang Xiaoxiao is a key-funded postdoctoral fellow at the School of Economics, Shandong University. Her research fields include fund markets and corporate finance. She has published many papers in international journals such as Journal of Banking & Finance, International Review of Financial Analysis, and Pacific-Basin Finance Journal.

Link to the paper: https://doi.org/10.1016/j.jbankfin.2024.107165