Working Paper

Abstract: I develop an unified quantitative dynamic general equilibrium model to explore how climate regulatory risk is reflected in cross-sectional asset pricing. The efficiency of the model is to jointly identify the effect of transition risk and green preference structurally. Conditional on the endogeneity of green preference over transition. greener environmental preference makes the market price of climate policy risk more positive given a low elasticity of substitution between green and brown capital. The quantitative implications of the model can rationalize the recent empirical evidence on the positive price of carbon transition risk and carbon intensity risk. It also highlights the heterogeneity of carbon premium over energy structure dimension. Finally, using textual analysis to measure transition risk from 10K filings, the paper shows that lower transition risk-exposed firms carry a 8.4% risk premium. Consistent with the model, the price of transition risk tends to be negative. Finally, the paper proposes an optimal climate policy design integrating the identified endogenous green preference.

Presented at SoFiE 2023 Climate Finance (NYU Shanghai), Imperial College Business School

Presented at  Baruch-JFQA Climate Finance and Sustainability Conference 2026 (Best Paper Award),  FMA(2025, Semi-Finalist FMA Conference Best Paper Award 2025), Shanghai Jiao tong University (ACEM), 5th Annual Boca-ECGI* Conference 2024, University of Liverpool Finance Seminar, University of Macau, Economic Seminar, HKUST(GZ) Seminar (2024.9) 

Abstract: This paper demonstrates that municipal borrowing costs increase with biodiversity exposure, with affected counties experiencing 42-63 basis point higher yields. Using Endangered Species Act (ESA) critical habitat designations as exogenous shocks, we identify two transmission channels: employment reductions in regulated industries and declining property tax revenues. These effects are moderated by local governance quality and debt structure. Our results establish biodiversity regulation as a distinct priced risk factor in municipal finance, with important implications for public borrowing costs.

(Presented at FMA 2026, HKUST(GZ) CARER 2026, AAEA(2025), SWUFE ESG Conference, HKUST(GZ) FinTech Workshop)