Working Papers

"Skilled Banker Mobility and Bank Default" with Steven Ongena

This study investigates the impact of skilled banker mobility risk on bank fragility. Using a novel measure of skilled banker mobility risk, we find that an increase in this risk raises the probability of bank default. The effect is more pronounced for banks facing higher competition and with a high proportion of non-performing loans. Further, we show that labor mobility restriction laws can help mitigate the detrimental effect of skilled banker mobility risk. Our findings suggest that skilled banker mobility can exacerbate bank fragility, but proper policies can bolster resilience against possible adverse effects from labor market frictions. 

"Cybersecurity and Bank Distance-to-Default" (Reject & Resubmit at JFQA)

(Presentations: 2025 World Finance Conference, 2024 FMA European Conference)

• Best Paper Award 2025 World Finance Conference

In this study, I find that cybersecurity risk increases the probability of bank default. The effect is larger for banks with deposit withdrawal but less pronounced for banks with liquidity buffers. The results are robust to using an instrumental variable approach and to using alternative measures. Findings provide suggestive evidence that cybersecurity risk exacerbates financial instability.

"Climate Change and Bank Default" 

(Presentations: 2024 Boca-ECGI Corporate Finance and Governance Conference, 2024 Adam Smith Sustainability Conference & 2nd Annual Conference of the British Accounting Review, 2024 WBFS)

I find that climate change increases the probability of bank default. The effect is more pronounced for banks with a higher exposure to climate disasters. Further, I find that climate adaptation policy can lessen bank default risk due to climate change. The results are robust to using an instrumental variable approach and to using alternative measures. 

"The Impact of Bank Herding on Systemic Risk"

(Presentations: Yonsei University, Rutgers University)

I find herding by big banks interacts with boom periods to provide a stronger predictive power of systemic risk to next periods beyond what is predicted by bank herding and boom periods individually. I attribute these results to evidence of too-many-and-big-to-fail. 

"Natural disaster and the real effect of skilled labor mobility"  with S. Ghon Rhee (R&R)

Previously circulated as "Labor Mobility, Climate Disasters, and Corporate Cash Reserve" 

(Presentations: 2025 FeAT8, 2024 Adam Smith Sustainability Conference & 2nd Annual Conference of the British Accounting Review, 2024 WFBS)

This study shows that firms increase their cash holdings in response to relaxing labor mobility constraints. I also find that firms with higher skilled labor promptly increase their cash reserve by responding to intense climate disasters, whereas firms with higher routine-task labor remain unchanged. Overall, the findings provide suggestive evidence that firms with skilled workers who are exposed to severe climate disasters have a conservative financial policy to shield from the increased cost of labor adjustment caused by climate disasters. 

"Happiness and Innovation around the World" with Fangfang Hou and Seongkyu Gilbert Park (R&R)

(Presentations: 2022 Greater China Area Finance Conference*, 2022 Asian FA*, 2021 APAD*, 2018 ICAFEL, 2018 Asian Meeting of the Econometric Society*, 2018 FMA European Conference, 2018 Midwest Economic Association*, 2017 Asiatic Research Institute*)

Using data from World Happiness Report, we document that happiness positively affects innovation. The effect is more pronounced in countries with national culture of muscularity, long-term orientation, and trust. Our results remain intact through all identification tests. We find that happiness promotes innovation through which channels of collaboration, productivity, and risk-tolerance. Overall, our results suggest that happiness fosters innovation around the world.

“Climate Change Exposure and Firm Cash Holdings” 

(Presentations: 2023 ICGS (International Corporate Governance Society) conference, University of Basel)

Using firm-level climate change exposure data, I show that firms significantly increase their cash holdings in response to increases in climate change exposure. Further, exploiting staggered adoptions of climate change adaptation across states, I find that climate adaptation actions lessen the effect of climate change exposure. 

“Climate Change and Corporate Investment Decisions” 

(Presentations: 2023 ICGS (International Corporate Governance Society) conference, 2023 World Finance Conference, University of Basel)

In this study, I document that climate uncertainty negatively affects corporate investment. The effect is more pronounced for firms with higher capital intensity, higher operating inflexibility, and less redeployable capital. Further, I find that climate adaptation policy mitigates the negative effects of climate uncertainty on corporate investment. Findings suggest that climate uncertainty can depress corporate investment, but climate adaptation policies shield firms from climate uncertainty contributing to investment resilience.

"Inflation, Heterogeneous Beliefs, and Mispricing"

(Presentations: 2023 SFiC (Sustainable Financial Innovation Centre), 2017 World Finance Conference, 2015 Hong Kong Joint Finance Research Workshop, 2015 Financial Management Association Annual Meeting, 2015PBFEAM, Rutgers University, Hong Kong Polytechnic University, Chinese University of Hong Kong, University of Sydney, Rensselaer Polytechnic Institute, Hitotsubashi University, International University of Japan) 

I find that, heterogeneous beliefs are particularly strong following periods of highly volatile inflation. To empirically test whether heterogeneous beliefs on inflation lead to mispricing, I entertain the possibility that anomalies at least partially reflect mispricing. I find that, following high inflation periods, anomalies are stronger and the returns on the short-leg portfolios are lower. The key explanation is that, following high inflation periods, the most optimistic belief about stocks tends to be overly optimistic, as a result, stocks tend to be overpriced.

Publication

"Climate Change, Bank Fragility, and Systemic Risk" Review of Corporate Finance, 4, 2024, 127-150.

(Presentations: 2023 Dolomites Summer Finance, 2023 Risklab/Bank of Finland/ESRB Conference on Systemic Risk Analytics, University of Basel)

I document that climate change affects financial stability. Both physical climate change and transitional climate change increase substantial systemic risk. The effect is more pronounced for banks with higher climate change exposure, higher loan portfolio synchronicity, and higher bank default probability. The results are robust to using an instrumental variable approach and to using various alternative measures. Further, exploiting staggered adoptions of climate change adaptation across states, I find that climate adaptation actions can reduce systemic risk due to climate change. Findings provide suggestive evidence tht climate adaption can build resilience to climate impacts. 

"Political Corruption, Dodd-Frank Whistleblowing, and Corporate Investment" with Qingjie Du, Journal of Corporate Finance, 73, April 2022, 102145.

(Presentations: 2020 FMA European Conference*, 2019 CAFM*, 2019 Australasian Finance and Banking Conference*, 2019 FMA Asia-Elevator Pitch*) 

We find firms in more corrupt states invest 7.66% less than firms in less corrupt states. The deterrent effect of corruption diminished after the Dodd-Frank Whistleblower Provision enacted. Our findings suggest political corruption hinders investment, but the change of legal environment can help firms reduce the decline in investment in highly corrupt states.

(Presentations: 2019 Midwest Finance Association Meeting*, 2018 Financial Management Association Annual Meeting, 2018 CAFM*)

In emerging economies, greater corruption is related to greater capital expenditures. In advanced economies, greater corruption is positively related to innovation. Our findings suggest that corruption leads firms to take more action in the areas that the economy has a competitive edge in.