speaker time

Finance Seminar2019-16)

Topic: Rainy Day Liquidity

Speaker: Tong Yu,University of Cincinnati

Time: Wednesday, 29 May, 10:00-11:30

Location: Room 217, Guanghua Building 2


As the largest stakeholder in the corporate bond market, insurance firms may act as rainy day liquidity providers in times of market stress since their cash flows are largely independent of capital market conditions. We theoretically model and empirically support this distinct role played by insurers. Specifically, insurer corporate bond purchases improve bond liquidity while their bond sales do not. Separating the sample into crisis and non-crisis periods and bond groups based on rating and liquidity, we find liquidity provision by insurers to be stronger under stressful conditions. Tests further reveal that cash flow position and investment horizons strongly influence insurers' purchase of low-rating bonds, and that insurers increase their purchase of low-rating bonds in the financial crisis and after the adoption of the Dodd-Frank Act.


Tong Yu is a Professor of Finance in the Lindner School of Business at the University of Cincinnati. His research has been primarily on the incentives and behavior of institutional investors and risk management. He published in academic journals such as the Journal of Financial Economics, Management Science, Journal of Accounting Research, Journal of Financial Intermediation, Journal of Banking and Finance, and Journal of Risk and Insurance, and practitioner journals including Financial Analyst Journal and Journal of Investment Management. Tong received the Early Career Scholarly Achievement Award from the American Risk and Insurance Association in 2011, and founded the China International Risk Forum in 2015. Before joining UC, Tong was a professor of finance at the University of Rhode Island. Tong received PhD in finance from University of South Carolina in 2001.

Your participation is warmly welcomed!

© 2019 Guanghua School of Management Peking University