Lin Tang - Research

Job Market Paper

Who Bears the Costs of Climate Change? Evidence from Catastrophes and Homeowners Insurance

The paper studies how the costs of climate change are borne by households through the lens of catastrophes and homeowners insurance. Combining representative U.S. household survey data with state-level catastrophe shocks and insurer-level financial and rate-filing information, I first show that, surprisingly, households in catastrophe-shocked states do not experience a significant increase in homeowners insurance costs relative to those in unshocked states. This pattern varies with the stringency of state regulation over insurance rate changes. In shocked states with light regulation, households on average pay 17.9% more for homeowners insurance and are more likely to drop the insurance relative to the control group. However, no such effects are observed in shocked states with stringent regulation, as insurers partially transfer costs in these states to unaffected states. I provide supporting evidence for this mechanism by constructing a novel state-level loss-sharing exposure index for unaffected states to capture the extent to which they suffer from insurers shifting losses out of tightly regulated, shocked states. On average, households in unaffected states with a one-standard-deviation increase in the exposure index pay 9.3% more for homeowners insurance, despite not being directly hit by catastrophes. The effect is stronger in states with light regulation and lower insurance market competition. Moreover, low-income households in shocked states with light regulation are disproportionately affected: they are more likely to face higher homeowners insurance costs and forgo coverage following a catastrophe. Overall, this study highlights the unequal distribution of climate-related costs within the homeowners insurance market and the critical roles of insurance regulation.

Presented at: 2026 AsianFA Annual Conference (scheduled), 2026 China International Conference on Insurance and Risk Management (scheduled), 2026 MRS International Risk Conference (scheduled), The 3rd CUFE LongMa Insurance Forum, 2026 HKUST-WSB Workshop on Climate Risk, Sustainability, and Real Estate, 2025 Modern Risk Society PhD Seminar, Huazhong University of Science and Technology, Jinan University, Nankai University, Shenzhen University, Xiamen University, Zhongnan University of Economics and Law

Working Papers

Does Mobile Payment Adoption Reduce Corruption? Cross-Country Evidence, with Yuhai Xuan and Hong Zou, Accepted at Management Science

This study examines how the adoption of mobile payment in a jurisdiction affects its level of corruption. In contrast to the commonly perceived benefits of digital payment in reducing corruption, our analyses of 171 mobile payment adopting jurisdictions show that mobile payment adoption increases corruption in the short run (up to three years from adoption), after which this effect gradually dissipates and becomes statistically insignificant. This observed increase is largely driven by petty corruption and does not appear to be driven by factors such as Bitcoin trading or improved corruption detection following mobile payment adoption. The effect is concentrated in jurisdictions with moderate levels of corruption before adoption, and can be attributed to a regulatory lag. We provide corroborating micro evidence from individual-level survey data, showing that individual bribe payment increases with mobile phone usage for individuals in jurisdictions with higher mobile payment coverage and laxer mobile payment regulation. Overall, our findings reveal a critical caveat to FinTech’s benefits: without timely regulation, mobile payments can temporarily exacerbate the problem they are intended to mitigate.

Presented at: 2023 CICF, 8th International Conference on Smart Finance, 2022 HKU Finance PhD Brownbag, 2022 Modern Risk Society PhD Seminar, 2022 China FinTech Research Conference, 2022 Greater China Area Finance Conference, 2022 AsianFA Annual Conference, 2022 World Finance Conference

Public Pension Deficits and Household Investments, with Hong Zou

We examine the effects of the public pension deficits on household investments. Exploiting the staggered occurrences of deficits in the employees’ public pension funds across provinces in China, we find that households affected by these deficits significantly increase risky financial investments, primarily through the purchase of wealth management products (WMPs), relative to unaffected households. WMPs are financial products with higher risks and higher returns than deposits and bonds, but not as risky as stocks. The effect is concentrated among younger and better-educated households. Households exposed to pension deficits also significantly increase educational investments, with the effect especially concentrated among younger and less-educated households, those employed in the private sector, and those without children. Consistent with a belief-changing channel, households in deficit-affected provinces exhibit a greater intention toward self-reliance for post-retirement life and reduce pension contributions under flexible employment arrangements following the deficits. Overall, our study uncovers unintended positive effects of public pension deficits, which prompts households to actively reallocate investments to hedge against rising longevity risk.

Presented at: 2026 CICF (scheduled), 2026 ZEW Ageing and Sustainable Finance Conference, 2025 MRS International Risk Conference (SWUFE Research Excellence Award), 2025 AsianFA Annual Conference, 2nd HKU Summer Finance Conference PhD Consortium, 2024 Greater Bay Area Finance Workshop, 2023 HKU Finance PhD Brownbag

Climate Risk Contagion: Customers’ Heat Exposure and Suppliers’ Stock Volatility, with Yugang Ding and Jingwu Li

Using data on listed companies in China’s A-share market and their major customers, we examine the effects of customers’ heat exposure on suppliers’ stock return volatility. By constructing a measure of extreme heat exposure of major customers, we find that higher customer heat exposure significantly amplifies suppliers’ stock return volatility. We show that customer heat exposure increases supplier stock return volatility by reducing supplier-customer transaction volumes and eroding supplier profitability. This effect is significantly attenuated when firms provide more extensive climate risk disclosures or receive greater analyst attention, highlighting the role of information frictions in the transmission of climate risks to financial markets. In response to transaction disruptions from customers’ climate risk exposures, suppliers tend to prioritize short-term adjustments, such as managing accounts receivable, cash reserves, and inventory over long-term strategies like R&D investments.

Presented at: 2025 Chinese Finance Annual Meeting*

Publications

When Expectations of Implicit Government Guarantees Diminished, Do Retail Stock Investors Run Away? [Link]

with Zhi Zhuo and Hong Zou, Journal of Banking & Finance, 2025

We investigate the impact of implicit government guarantees (IGGs) on the trading behavior of retail stock investors for non-default firms, using China’s first corporate bond default in March 2014 as a negative shock to public expectations of IGGs. Our difference-in-differences analysis shows that, following the Chaori default shock, retail investors withdraw from high-default-risk firms that have not yet defaulted. This outcome is not attributed to industry, geographical or supply-chain contagions, declining stock prices, worsened financial metrics, or merely a seasonal effect. The effect is more pronounced for firms with preexisting larger retail ownership breadth or higher stock trading turnovers, for non-state-owned enterprises, and for firms with less sustainable earnings. When the initial default shows signs of a bailout, retail investors’ withdrawal partially reverses. Overall, the diminishment of IGGs seems to have reduced the moral hazard of retail stock investors and encouraged them to focus more on firms’ fundamentals, potentially enhancing the capital allocation efficiency in China’s stock market in the long run.

Impact of Urban-Rural Medical Insurance Integration on Consumption: Evidence from Rural China [Link]

with Hua Chen, Yugang Ding and Lizhen Wang, Economic Analysis and Policy, 2022

Directors’ and Officers’ Liability Insurance and Firm Value: An Empirical Study Based on Chinese A-Share Listed Firms [Link]

with Hua Chen and Xiaoquan Wang, Chinese Review of Financial Studies (金融评论), 2020

Work in Progress

Technological Change, Job Security and Retirement Savings: Evidence from GenAI and 401(k) Participation, with Yifan Jia

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