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275th Biweekly Academic Forum

Published:2019-03-24  Views:

Topic:Investordiversity and liquidity in the secondary loan market

Speaker:Pei SHAO, holding a Ph.D. in Finance from York University, Canada, is an AssociateProfessor at University of Lethbridge, Canada. His research interests include SyndicatedLoan Market, Financial Intermediaries, Corporate Finance, IPO, Institutional Investors,and Mergers and Acquisitions. He has published more than 10 papers ininternational journals such as Review of Financial Studies, ContemporaryAccounting Review, Journal of Banking and Finance, Journal of Money, Credit andBanking, Review of Finance. He has received special research funding fromthe Canadian Humanities and Social Sciences Research Committee, research awardsfrom the US Federal Insurance Corporation, and special research awards from theUniversity of Lethbridge.

Time: 13:00-14:00,Monday,March 25, 2019

Venue:Room 301, Building No.1 of Dingxiang Park, Shahe Campus of CUFE

Moderator: AssistantProfessor Kai WU, School of Finance at CUFE

Abstract: We find strong supporting evidence that investor diversity isbeneficial to loan liquidity: Loans held by more diverse syndicates as measuredby the number of investor types or the concentration of investor-types’ loanshares have lower bid-ask spreads in the secondary market. These results arerobust, and do not appear to be driven by investors’ borrowers/loan selection,including reverse causality. Further, our results are not driven by any singleset of investors. While an increase in the number of both hedge funds andpension funds in a loan syndicate lowers the loan’s bid-ask spread, an increasein the number of both banks and insurance companies has the opposite effect.The differential impact of these investors adds support to the idea thatdiversity among investors plays an important role in the liquidity of loans inthe secondary market.

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