Topic: Bank-Runs, Contagion and Credit Easing Time&Date:  19:00-20:30, 2021/04/16 (Friday) Speaker: Prof. Javier Bianchi (Federal Reserve Bank of Minneapolis & Journal of International Economics) Abstract: We present a tractable dynamic macroeconomic model of self-fulfilling bank-runs. An individual bank is vulnerable to a run when a loss of investors' confidence triggers deposit withdrawals and leads the bank to default on its obligations. We analytically characterize how this vulnerability depends on  macroeconomic fundamentals, which are in turn affected by the number of banks facing a run. We also examine the normative implications of this feedback.  A key policy insight is that the effectiveness of credit easing and its welfare implications depends critically on whether a financial crisis is driven by fundamentals or by runs…

Topic: The Application and Commercialization of AI Algorithms: Case and Future Time&Date:  10:30-11:30, 2021/4/16 (Friday) Speaker: Dr. Siming Zhao Abstract: Due to the digitalization of huge amount of real-life and commerce process and the huge increase of computing power, AI is rapidly changing the world of finance and commerce. In the dawn of data-technology era, we are witnessing the power and huge potential of AI technology in changing our way of life and how we do business. What are the current main applications of AI in finance and e-commerce platform? What is the future of AI in helping human kind? We will try to address this topic in this seminar. Biography: Dr. Siming Zhao, data mining expert from Alibaba Group, is committed to increase the efficiency of the e-commerce marketplace’s search and…

Global Business Economics Programme (GBE) is a new stream under the Economics major. Students will study managerial economics to prepare them for work in the field of international business. The programme will familiarize students with how business is done in Asia and Europe.   This stream is formed from a bipartite agreement between Copenhagen Business School (CBS) and School of Management and Economics (SME).  Every year, SME will select 10 year 1 students to join the GBE programme. In the spring term of their Year 3, these students will go on exchange for one semester to CBS to study with their counterparts in the International Business in Asia (IBA) programme, forming a cohort together. In the following fall term, both GBE and IBA students will come to CUHK-Shenzhen to study for one semester. Students will spend their last term of study at their home institutions. Different from regular exchange programs, students in GBE programme will study cohort-specific…

Topic: The application and commercialization of 3D Printing: Cases and Rules Time&Date:  10:30-11:30, 2021/4/9 (Friday) Speaker: Dr. Jing Zhang  Abstract: 3D Printing is changing the way of design and manufacturing in the world. In some fields, such as the hearing aid cases, 3D Printing has thoroughly wiped out the traditional way of how the business was done. But in other applications, the application and commercialization did not go as expected. What are the dominating factors that these succeeded may tell us and what those failed may teach us? What are the rules that we shall follow to guide us the way to the future of 3D Printing? Biography: Dr. Jing Zhang, the founder and CEO of ZSFab, is committed to Material Digitization to enable  material performance customization and solve application-oriented…

Topic: Why Does Option Volume Predict Stock Returns? The Role of Investor Disagreement Time&Date:  13:00-14:30, 2021/4/9 (Friday) Speaker: Prof. Allaudeen Hameed (National University of Singapore) Abstract: In addition to informed trading in options, we show that divergence in investor beliefs is an important driver of trading in options. We find a strong negative relation between disagreement-based trading volume in options and future stock returns. This relation is amplified when the underlying stock is mispriced and when stocks are costly to short. Moreover, the disagreement trades spike during earnings announcements consistent with trades motivated by differences in interpretation of public news. Our findings also suggest that heavy trading in options does not facilitate the full incorporation of investor beliefs in stock prices…

Topic: Reputation Vs. Regulation: NGO Monitoring and Corporate Social Responsibility Time&Date:  10:30-12:00, 2021/04/09 (Friday) Speaker: Prof. Bing Zhang (Nanjing University) Abstract: The past few decades witnessed the rise of private regulation and monitoring of firms by non-profit activists. Proved to be a vital role in private regulation of firms fulfilling corporate social responsibility (CSR), non-governmental organizations (NOGs) may influence corporate behavior through both corporate reputation and government regulation. Providing information about CSR performance, NGOs’ monitoring may affect corporate reputation and stakeholders’ decision. It can also reduce the cost of government supervision and increase the probability of corporate violations being discovered. Conducting a nationwide randomized controlled trial (RCT) covering 562 listed…

Recently, South China regional final of CFA Institute Research Challenge 2020-2021 drew to a close. The team Winkee from The Chinese University of Hong Kong, Shenzhen (CUHK-Shenzhen) comprising undergraduate students Huang Yuxuan, Sun Binjie, Pu Kewei of School of Management and Economics (SME), Pan Doudou of School of Data Science (SDS), and Lu Boyu of Financial Engineering major came to the fore from more than 30 participating teams from South China, and won the championship. Meanwhile, the team Winkee also won  two other awards: The Best PPT Production Award, and The Best Individual Performance Award by the team leader Lu Boyu. Group photo of team Winkee Since October 2020, Winkee has successfully entered South China regional final after being selected by the campus qualification final. After fierce competition with 33 teams from 21 universities including Peking University HSBC Business School, South…

Topic: CEO Compensation: Evidence From the Field Time&Date:  15:00-16:30, 2021/4/2 (Friday) Speaker: Prof. Dirk Jenter (London School of Economics) Abstract: We survey directors and investors on the objectives, constraints, and determinants of CEO pay. 67% of directors would sacrifice shareholder value to avoid controversy on CEO pay, implying they face significant constraints other than participation and incentive compatibility. These constraints lead to lower pay levels and more one-size-fits-all structures. Shareholders are the main source of constraints, suggesting that directors and investors disagree on how to maximize shareholder value. Both directors and investors believe intrinsic motivation and reputation to be stronger motivators than incentive pay. Fairness is a significant determinant of pay. One reference point is shareholder returns;…

Topic: A/B Contracts   Time&Date:  10:30-12:00, 2021/03/26 (Friday) Speaker: Prof. Michael Powell (Northwestern University) Abstract: This paper aims to improve the practical applicability of the classic theory of incentive contracts under moral hazard. We establish conditions under which the information provided by an A/B test of incentive contracts is sufficient for answering the question of how best to improve a status quo incentive contract, given a priori knowledge of the agent's monetary preferences. We assess the empirical relevance of this result using data from DellaVigna and Pope's (2018) study of a variety of incentive contracts. Finally, we discuss how our framework can be extended to incorporate additional considerations beyond those in the classic theory. Biography: Prof. Michael…

Topic: Failure to Jettison: The Cost of Labor on the Path to Recovery   Time&Date:  13:00-14:30, 2021/3/26 (Friday) Speaker: Prof. Xiaoyun Yu (Indiana University) Abstract: Exploiting China’s 2008 Labor Contract Law (LCL), we show that following an increase in the cost to restructure workforce, financially distressed firms decelerate the layoff rate of low-quality employees. Non-SOE firms and firms operating in regions with stringent law enforcement, labor-friendly courts, or having more labor unrest, suffer more. Post LCL, distressed firms with an ex-ante larger proportion of less-educated employees experience lower ROA growth; they increase sales of assets and cut wages to a greater extent. Consequently, labor-intensive firms, especially low-quality labor-intensive firms, have a lower probability of survival and recovery. Our…

Banking crises are usually self-fulfilling: the expectation of bank bankruptcy makes those happen. In the recent research of Prof. Xiong Wei and the co-authors, the results indicate that even in the absence of panics, large bank equity declines are associated with substantial credit contractions and output gaps. While panics are an important amplification mechanism, panics are not necessary for banking crises to have severe economic consequences. This paper was published in the Quarterly Journal of Economics. To do the research, a new dataset was constructed on bank equity returns and narrative information on banking panics for 46 countries over the period of 1870–2016.It is found that bank equity declines predict large and persistent declines in future real GDP and bank credit to the private sector. For example, a decline in bank equity of at least 30% predicts 3.4% lower real GDP and 5.7 percentage points lower bank credit-to-GDP after three years. As a further confirmation, it is…

Dear all,   The SME and SFI Newsletter, Issue 15, Mar 2021 arrives again. It summarizes the key developments of the two schools in the past two months, including researches and honors, cooperations and conferences, education and students, news and promotion, employment and entrepreneurship and etc. We welcome you to share the newsletter with your family and friends and let more people know about us.   Please scan the QR code or click read more to review.

Topic:  Currency Wars or Efficient Spillovers? A Theory of International Policy Cooperation Time&Date:  9:30-11:00, 2021/03/19 (Friday) Speaker:  Prof. Anton Korinek (University of Virginia) Abstract: In an interconnected world, national economic policies regularly lead to large international spillover effects, which frequently trigger calls for international policy cooperation. However, the premise of successful cooperation is that there is a Pareto inefficiency, i.e. if there is scope to make some nations better off without hurting others. This paper presents a first welfare theorem for open economies that defines an efficient benchmark and, conversely, that spells out conditions that need to be violated to generate inefficiency and scope for cooperation. The conditions for efficiency are: (i) policymakers act competitively in the…

In order to interact more with students, the WeChat Channels account of SME & SFI has been officially launched! Here we will release interesting videos from time to time to share campus life with everyone.   We welcome students who are creative and have the willingness to express themselves to contribute your videos!   Student activities? /Classroom fun? /Internship experience? Straight A-mazing students of the dorm? Let’s share your stories!   The selected videos will not only receive official promotion, but also a series of souvenirs from SME. The UP host of the most popular video selected every month will also have the opportunity to become the official video host! Everyone is welcome to contribute!

The pandemic reshaped traditional customs that many Chinese people celebrate the Chinese New Year of 2021, and “staying put” became a new trend. In this traditional festival of family reunion, were those who have not returned to their hometowns and have stayed put for the new year equally happy? What factors affect people's happiness during the Chinese New Year? How to maintain happiness in the pandemic era? In order to find out these answers, supported by the National Natural Science Foundation of China, a research team led by Prof. Jia Jianmin, Presidential Chair Professor of the School of Management and Economics (SME), The Chinese University of Hong Kong, Shenzhen (CUHK-Shenzhen), conducted a national survey on "The Sense of Happiness and Response to the Pandemic During the Chinese New Year ". During February 20-23, a total of 3,419 questionnaires were collected, with samples from 247 cities across the country, mainly in the 20-40 age group, with 49.28% males, covering…

Topic:  Return Predictability and Machine Learning Time&Date:  10:30-11:30, 2021/03/12 (Friday) Speaker:  Prof. Guofu Zhou (Washington University in St. Louis) Abstract: We propose an employee sentiment index, which complements investor sentiment and manager sentiment indices, and find that high employee sentiment predicts a subsequent low market return, significant both in- and out-of-sample. The predictability can also deliver sizable economic gains for mean-variance investors. The employee sentiment’s impact is stronger among employees who work in the headquarters state and among less experienced employees. The economic driving force of the predictability is distinct: high employee sentiment leads to high contemporaneous wage growth due to immobility, which in turn results in subsequently lower firm cash flow and lower stock return…

At present, the centrum of inflation is rising gradually, and the division between countries is intensifying. Only the two-wheel drive of the “dual circulation” economy can support the sustainable growth of China's economy. Regardless of globalization or de-globalization, China and the U.S. will play a key role. However, whether a new G2 pattern can be formed depends on the economic recovery of the U.S. and the smooth development of “dual circulation” economy of China. Shen Minggao, Chief Economist of Guangfa Securities, Chief Executive Officer of GF Holdings (Hong Kong), and Adjunct Professor of Shenzhen Finance Institute, made the above analysis at CUHK-Shenzhen SME and SFI Distinguished Lecture Series.   Combined with the current development environment of the international community, Shen Minggao put forward five key issues that the global macro economy may face or is already facing. 1. Shall investors worry about inflation or deflation? After the COVID-19 crisis,…

​ In this contemporary era of information explosion, consumers can easily obtain massive amounts of product information to purchase products. However, due to time and energy constraints, it is difficult for consumers to process all relevant product information. Therefore, how to selectively collect and process product information has become an important decision in consumer purchasing behavior. For example, when consumers are considering buying a computer on Taobao, there are hundreds of positive and negative reviews of this computer. When time and energy are limited, consumers usually expect to maximize the utility of purchases, when will they read more "good reviews" and when will they read more "bad reviews"? In the past, relevant theoretical researches mainly focused on whether consumers would collect information and how much information they collected during their purchasing behaviors. However, researches on how consumers selectively process different types of product…

The strong trend of the stock market at the end of 2020 has made the market fulfilled with expectations in 2021. Will the bull market continue in Year of the Ox? Some people believe that China’s bull market is short-lived and bear market is long-lasted. However, recent research has found that this phenomenon which has plagued China’s stock market for a long time, is gradually disappearing. The market is moving towards a path of healthy development, and the liberalization of the stock market has attracted attention. The liberalization of the stock market in emerging markets has undoubtedly made a huge impact on the world economic order. Prof. Zhang Bohui, Executive Associate Dean of School of Management and Economics (SME), The Chinese University of Hong Kong, Shenzhen (CUHK-Shenzhen) and his co-authors demonstrated that liberalization enables more market participants to take risks, thereby spurring innovation. In addition, innovation activities often involve long-term…

Based on the energy saving and environmental protection of electric vehicles, many countries have introduced policies to support the research and development of electric vehicle technology in recent years, and promoted the entire industrial chain and ecological construction of electric vehicles. A recent report released by Strategy&, Part of the PwC network predicts that by 2030, the registration number of new electric vehicles in the three biggest auto markets, EU, the United States and China, will exceed 17.4 million, accounting for nearly 27% of total vehicle sales. Prof. Chen Rui of School of Management and Economics (SME), The Chinese University of Hong Kong, Shenzhen (CUHK-Shenzhen) and his team found in the latest research that, the realization of environmental benefits of electric vehicles needs to be based on the integration of multiple conditions. The team also explored what policies the government needs to adopt to guide the usage of electric vehicles in shared…