Finance Online Seminar（2020-01)
Topic: China's Model of Managing the Financial System
Speaker: Wei Xiong, Princeton University and NBER
Time: Wednesday, 26 February, 10:00-11:30 am Beijing Time
Location: Microsoft Teams Online conference room
China’s economic model involves active government intervention in financial markets. We develop a theoretical framework that anchors government intervention on amission to prevent market breakdown and volatility explosion caused by the reluctance of short-term investors to trade against noise traders. In the presence of information frictions the government can alter market dynamics by making noise in its intervention program an additional factor driving asset prices, and can divert investor attention toward acquiring information about this noise factor rather than fundamentals (as a result of complementarity in investors’ information acquisition). Through this latter channel, the widely-adopted objective of government intervention to reduce asset price volatility may exacerbate, rather than improve, information efficiency of asset prices.
WEI XIONG is Hugh Leander and Mary Trumbull Adams Professor in Finance and Professor of Economics in the Department of Economics and Bendheim Center for Finance, Princeton University. His research interests center on capital market imperfections and behavioral finance. He has published in top economics and finance journals on a wide range of research topics, such as speculative bubbles, asset pricing with heterogeneous beliefs, asset market contagion, limited investor attention, nonstandard investor preferences, rollover risk and other financing frictions faced by firms. His current research interests focus on financialization of commodity markets, belief distortions in the recent financial crisis, and China’s financial markets. He has received various awards, including 2012 Smith Breeden Award (first prize) for the best non-corporate finance paper published in Journal of Finance and 2013 NASDAQ OMX Award for the best asset pricing paper presented in Western Finance Association Meetings. He received his Ph.D. in finance from Duke University in 2001 and B.S. in physics from University of Science and Technology of China in 1993. He is a research associate of the National Bureau of Economic Research and had been the finance editor of Management Science in 2009-2011.
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