Kairong Xiao
Roger F. Murray Associate Professor of Business
Columbia Business School & NBER
741 Kravis
New York, NY, 10027, U.S.
Email: kairong.xiao@gsb.columbia.edu
Biography
Kairong Xiao is Roger F. Murray Associate Professor of Business at Columbia Business School and a Research Associate at the National Bureau of Economic Research (NBER). His research interests span financial intermediation, corporate finance, monetary economics, industrial organization, and political economy. His research papers have been published in top finance and economics journals, including the Journal of Finance, the Review of Financial Studies, the Journal of Financial Economics, Econometrica, the Journal of Monetary Economics, and Management Science. He received numerous awards for research excellence, including the Review of Financial Studies Rising Scholar Award, the Journal of Finance Dimensional Fund Advisors Prize for Distinguished Paper, and the Review of Financial Studies Best Paper Award runner-up.
Research
Working papers
Why does monetary policy move long-term bond yields so much? This paper sheds light on this question by linking the movements in bond yields to investor flows and portfolio reallocations influenced by monetary policy.
Nonbank Fragility in Credit Markets: Evidence from a Two-Layer Asset Demand System, with Olivier Darmouni and Kerry Siani
Journal of Finance, R&R
We develop a two-layer asset pricing framework to analyze the fragility of the corporate bond market. We use the estimated model to quantify the equilibrium effects of unconventional monetary and liquidity policies on bond prices.
Will Central Bank Digital Currency Disintermediate Banks? with Toni Whited, and Yufeng Wu
Review of Financial Studies, R&R
How would CBDC affect the banking system? We shed light on this question using a dynamic banking model with imperfect competition and financial frictions.
Closing the Revolving Door, with Joseph Kalmenovitz and Siddharth Vij
Best Paper Award at the Financial Markets and Corporate Governance Conference
Journal of Finance, R&R
Using granular payroll data on 23 million federal employees and the wage thresholds that trigger post-employment restrictions, we uncover the systematic evidence of revolving door incentives.
Unintended Consequences of Post-Crisis Liquidity Regulation, with Suresh Sundaresan
FMA Conference Best Paper Awards: semi-finalist
Post-crisis liquidity regulations have led to a new realignment among banks, government-sponsored enterprises, and money market funds.
Fuzzy Bunching, With Adrien Alvero
By using the area of the bunching bulge in the cumulative distribution function, it is possible to uncover the underlying bunching incentive in the presence of optimization and measurement errors.
Published and accepted papers
12, Bank Debt, Mutual Fund Equity, and Swing Pricing in Liquidity Provision, With Yiming Ma and Yao Zeng
Review of Financial Studies, accepted
The conventional wisdom is that the only way that financial intermediaries can create liquidity is to issue claims with stable value. We show this is not true.
11.The Shadow Cost of Collateral, With Guangqian Pan and Zheyao Pan
Review of Financial Studies, accepted
Best Paper Award at the FMA 2022
Contrary to the conventional wisdom that collateral is a low-cost mechanism to mitigate financial frictions, we estimate that the shadow cost of pledging collateral is equivalent to an interest rate of 6%-9% for small businesses.
10. Regulatory Costs of Being Public: Evidence from Bunching Estimation, With Michael Ewens and Ting Xu
Journal of Financial Economics, 2024
Best Paper Award at the Utah Winter Finance Conference 2022
Best Paper Award at the CICF 2021
Featured in Columbia Law School Blue Sky Blog
We explore the connection between regulatory costs and the number of listed firms by exploiting a regulatory quirk: many rules trigger when a firm's public float exceeds a threshold.
Journal of Financial Economics, accepted
A quantity-based liquidity regulation may crowd out bank lending and lead to the migration of liquidity risks. A price-based mechanism can alleviate such distortions.
8. Factions in Nondemocracies: Theory and Evidence from the Chinese Communist Party (NBER WP NO. 22775), with Patrick Francois and Francesco Trebbi
Econometrica, 2023
Under the surface of the Chinese Communist Party, there are rules that govern power sharing among rival factions and keep high-ranking individuals moving up the ladder.
7. Watch what they do, not what they say: Estimating regulatory costs from revealed preferences, With Adrien Alvero and Sakai Ando
Review of Financial Studies, 2023
Regulation costs inferred from banks' actions are significantly lower than self-reported estimates in surveys on banks.
6. Mutual Fund Liquidity Transformation and Reverse Flight to Liquidity, with Yiming Ma and Yao Zeng
Review of Financial Studies, 2022
The increased reliance on bond mutual funds for liquidity transformation has contributed to the disruptions in the liquid asset markets in the COVID-19 crisis.
Journal of Finance, 2022
Winner of the XiYue Award for Best Paper at CICF 2019
How is monetary policy transmitted through the banking system? We quantify competing theories of monetary transmission by estimating a dynamic banking model.
Utah Winter Finance Conference presentation video
4. Monetary Policy and Reaching for Income, with Kent Daniel and Lorenzo Garlappi
Journal of Finance, 2021
Winner of the SummerHaven Investment Management Prize for Best Paper at the Wharton--Rodney L. White Center 2019 conference
Featured in March 2019 NBER Digest, "Retail Investors Reach for Income when Interest Rates Fall".
Investors flow into income-generating assets such as high-dividend stocks and high-yield bonds when rates are low. This reaching for income behavior constitutes a transmission channel of monetary policy.
3. Monetary Transmission through Shadow Banks previously titled "Shadow Banks, Deposit Competition, and Monetary Policy"
Review of Financial Studies, 2020, Lead Article, Editor's Choice
The RFS Rising Scholar Award
Runner up of the RFS Best Paper Award
the WFA Cubist Award for Outstanding Ph.D. Research
The conventional wisdom of monetary policy suggests that bank deposits shrink when monetary policy tightens. The opposite happens in the shadow banking sector.
2. Low Interest Rates and Risk Incentives for Banks with Market Power, with Toni Whited, and Yufeng Wu
Journal of Monetary Economics, 2021
The interaction between interest rates and banks’ market power affects their risk-taking by lowering bank value.
1. Regulation and Market Liquidity (NBER WP NO. 21739), with Francesco Trebbi
Management Science, 2017
Against the popular claim that post-crisis regulations hurt liquidity, no evidence of liquidity deterioration is found during periods of regulatory intervention.
