Assistant Professor of Finance, INSEAD
Member of Finance Theory Group
CEPR Research Affiliate (FE)
Email: johncfkuong (at) gmail (dot) com; john (dot) kuong (at) insead (dot) edu
Research Interests: Corporate Finance, Financial Intermediation, Information Economics, Market Microstructure
Upcoming presentations, discussions and general updates
October 6-7, 2023: Attending "Wharton Conference on Liquidity and Financial Fragility". My paper "Monetary Policy and Fragility in Corporate Bond Funds" is on the program.
Revise and resubmit, Management ScienceSIX Best Paper Award at SGF conference 2019 Last updated: September 2021 Selected presentations: FIRS Budapest (cancelled), European Winter Finance Summit 2020, Cambridge Corporate Finance Theory Symposium 2019, EFA 2019*, FTG Summer meeting at Madrid, WFA 2019, FTG Spring meeting at Tepper, CFIC 2019, SGF 2019, EuroFIT@UCL 2018
Abstract: We consider a model in which dealers intermediate trades between clients and provide immediacy, or, market liquidity. Dealers can exert unobservable search effort to improve the chance of intermediating profitably. This moral-hazard friction impairs dealers’ ability to raise external finance and hence to compete aggressively with each other in providing liquidity. Market liquidity is limited even for safe assets and more so for assets with higher search cost. To alleviate the financing friction, dealers opt to finance with debt and intermediate in several markets simultaneously. Dealer leverage is therefore endogenous and related to variations in liquidity across otherwise unrelated markets. Our results shed light on how post-crisis regulations influence the provision of immediacy in bond markets.
Last updated: July 2023
Revise and resubmit, Journal of Financial Economics
Selected presentations: 9th Wharton Conference on Liquidity and Financial Fragility, CICF 2023(*), INSEAD Finance Symposium 2023, AFA 2023
Abstract: We document aggregate outflows from corporate bond funds days before and after the announcement of increases in the Federal Funds Target rate (FFTar). To rationalize this phenomenon, we build a model in which funds’ net-asset-values (NAVs) are stale and investors strategically redeem to profit from the mispricing when they learn about the increases of FFTar. Consistent with the model's predictions, we find that stale NAVs and loose monetary policy environments weaken (strengthen) outflows sensitivity to increases in FFTar during illiquid (liquid) market conditions. Our results highlight when and how monetary policy could systematically exacerbate the fragility of corporate bond funds.
The Review of Financial Studies (2021) 34.6: 2910-2948
Winner of Deutsche Bank Prize in Financial Risk Management and Regulation 2014Winner of Best Paper Awards in CSEF 2nd conference on "Bank Performance, Financial Stability and the Real Economy" at Capri, 2015
The Review of Financial Studies (2021) 34.9: 4269-4322
Journal of Financial Intermediation (2021) 48: 100885.
Journal of Financial Economics (2023), 150(2): 103709
Journal of Financial and Quantitative Analysis, (2023), First View, pp. 1 - 43
Sustaining trading relationships with lemons
Market power and agency frictions in delegated investment
Systemic risks in central clearing (with Vincent Maurin)