I’m Xiaobo Yu. a PhD Candidate in Finance. a Corporate Theorist. on the 2023-2024 job market.

I’m Xiaobo Yu

  • Corporate
  • Banking
  • Liquidity
  • Network

Xiaobo Yu

PhD Candidate in Finance at Columbia Business School.
Interested in corporate finance theory and financial intermediation.
On the 2023-2024 academic job market.

In particular, I am interested in

  1. The coordination problems and their contractual solutions
  2. The design of financial institutions and their legal framework
  3. The role of banking network topology in shaping the financial architecture
  4. The effect of firm pledegability on liquidity insurance provision

My Research

A General Theory of Holdouts (JMP) (2023)

Ubiquitous are the holdout problems in which agents free-ride on others' participation and jeopardize socially beneficial transactions. A simple unanimity rule solves them all but we don't see it. Why the absence? Instead, we see systematically different solutions are used. Why the heterogeneity? The paper shows how limited commitment could answer all these questions and that policies increasing commitment could backfire.

Restructuring vs. Bankruptcy (2023) [Slides] R&R at the Journal of Finance

with Ed R. Morrison, Giorgia Piacentino and Jason R. Donaldson

How can firms resolve financial distress? Bankruptcy is one way, albeit costly. A less costly way is out-of-court restructuring. But hold-out problems render it infeasible. Do policies that encourage bankruptcy filings, by decreasing costs, crowd out restructuring? We find that the answer is no. We study how regulatory interventions can further increase welfare.

Systemic Risk in Financial Networks Revisited: The Role of Maturity (2023) [Slides] R&R at the Journal of Finance

with Giorgia Piacentino and Jason R. Donaldson

We ask how liquidity risk propagates in interbank networks. We show that the answer hinges on the maturity of interbank debt. Indebtedness and connectedness are sources of fragility if debt is short term, but of stability if it is long term. The right network of long-term debts implements the optimal allocation of liquidity.

This paper subsumed Netting (Donaldson and Piacentino, 2018).

Liquidity Insurance and Pledgeability (2023) [Slides]

Theoretically a credit line provides liquidity insurance and should be non-revocable but they are often revoked upon covenant violation. Why? Small firms that need liquidity insurance the most often have lower credit limit and are revoked more often. Why? The papers shows that these covenants are designed to align the incentive to prevent inefficient continuation and large firms obtain better insurance through cross-pledging.

Spatial outward FDI: Evidence from China's multinational firms (Review of International Economics, 2023)

with Yiqing Xie, Zhihong Yu and Yu Zhou

Where do multinational firms invest? We find they are more likely to invest in a country that has a closer link to its previous investment, both geographically and economically.

This paper subsumed my undergrad thesis Network Effect in China’s Cross‑Border Merge and Acquisition (Yu, 2016), originally written in Chinese.

Other Projects in Progress

How does the preference profile affect the structure of core in Top Trading Cycle? with Dov Samet

How does risk affect the measurement of markups? with Laura Veldkamp

How does availability of collateral affect firm debt issuance choice? with Lukas Fischer

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Tell me about your projects and ask me about mine!

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