The 309th Wenlan Financial Forum

Abstract：

This paper examines the repercussions of Chinese regulators deviating from a long-standing full bailout policy in addressing the distress of a city-level commercial bank. This shift resulted in a persistent widening of credit spreads and a significant decline in funding ratios for negotiable certificates of deposit issued by small banks relative to large ones. Our empirical analysis pinpoints a novel contagion mechanism driven by reduced confidence in bank bailouts, which contributed to the subsequent collapse of several other small banks. However, the erosion of confidence in government guarantees also improved price efficiency and credit allocation while discouraging risk-taking among small banks.

Speaker Introduction：

Zhen Zhou currently serves as an Associate Professor and Doctoral Supervisor at the PBC School of Finance, Tsinghua University, as well as the Deputy Director of the Monetary Policy and Financial Stability Research Center of the same institution. He graduated from New York University with a Ph.D. in Economics in 2016. Prior to that, he obtained a Master's degree in Economics from Tsinghua University and a Bachelor's degree in Economics from Fudan University. His primary research areas are the theoretical study of Information Economics and its applications in financial intermediation, banking regulation, corporate finance, and macroeconomics. His research has been published in top economics journals worldwide, including the American Economic Review, Journal of Economic Theory, and Games and Economic Behavior. His research achievements have garnered numerous international and domestic academic and industry awards in recent years, such as the Second Prize for Outstanding Scientific Research Achievements of Colleges and Universities (Monograph and Thesis), the Outstanding Achievement Award of the China Information Economics Society, and the Best Paper Award of the PwC 3535 Forum. Additionally, he has presided over the Excellent Young Scientists Fund Project of the National Natural Science Foundation of China.