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Professor Xiong Wei Wins China Economics Prize 2018
Release time:2018-07-13Views:4819

The China Economics Prize Committee of the National Economics Foundation decides to award the China Economics Prize 2018 to Professor Xiong Wei for his outstanding contributions in the field of finance.


Prof. Xiong Wei’s important contribution to the field of economics is his focus on studying market frictions and behavioral biases that lead to imperfections and inefficiencies in the global capital markets. His theory explains the possible consequences of highly leveraged financial intermediaries, including liquidity issues and contagion effects in the market. In behavioral finance, he has developed a series of economic theories with his coauthors to analyze fundamental economic mechanisms that lead to asset bubbles and the substantial effects of asset bubbles. He has also made important contributions to a wide range of other topics, including asset pricing with heterogeneous beliefs and belief distortions in the financial crisis.


Prof. Xiong Wei is the Academic Director of Shenzhen Finance Institute and Academic Dean of School of Management and Economics, Chinese University of Hong Kong, Shenzhen.


He received his Ph.D in Finance from Duke University in 2001. Prior to that, he earned the Bachelor’s degree from the University of Science and Technology of China and the Master’s degree from Columbia University, both in Physics. He is the Trumbull-Adams Professor of Finance and Professor of Economics in the Department of Economics and Bendheim Center for Finance, Princeton University. He is also a Research Associate of the National Bureau of Economic Research in the U.S.


Professor Xiong is one of the world’s most influential scholars in the area of finance. His research interests are centered on capital market frictions and behavioral finance. He has published in top economics and finance journals on a wide range of research topics, such as speculative bubbles, asset pricing with heterogeneous beliefs, asset market contagion, limited investor attention, nonstandard investor preferences, financialization of commodity markets, belief distortions in the financial crisis, and China’s financial markets. He has received multiple prestigious awards, including the 2012 Smith Breeden Award (First Prize) from the American Finance Association, the 2013 NASDAQ OMX Award from the Western Finance Association, and the inaugural Sun Yefang Financial Innovation Award in 2015. He currently serves as the Co-Editor of Journal of Finance , the flagship journal of American Finance Association.


Prof. Xiong Wei’s Research


Professor Xiong Wei’s research focuses on how market friction and investors’ behavioral biases lead to imperfections and inefficiency in global financial markets. His research also covers a wide range of topics related to market friction and investors’ behavioral biases, including asset pricing with heterogeneous beliefs, asset market contagion, limited investor attention, nonstandard investor preferences, rollover risk, financialization of commodity markets, belief distortions in the financial crisis, and etc. His research has also contributed to an understanding of market friction and inefficiency in China’s financial system.


Professor Xiong Wei’s research areas include:

I. Capital market frictions
II. Behavioral finance
III. China’s financial system


I. Capital Market Frictions

Professor Xiong Wei has conducted a lot of research on various economic mechanisms that cause frictions in the capital market. His relevant research includes the following four areas:

1. Effects of financial intermediary capital on the market
2. Instability of short-term debt
3. Information frictions in the real assets market
4. Financialization of commodity markets


1. Effects of financial intermediary capital on the market

Publication

(1) “Convergence Trading with Wealth Effects: An Amplification Mechanism in Financial Markets,” Journal of Financial Economics, 2001, Vol. 62, 247-292.
(2) “Contagion as a Wealth Effect” with Albert Kyle, Journal of Finance, 2001, Vol. 56, 1401-1440.
(3) “Delegated Asset Management, Investment Mandates, and Capital Immobility” with Zhiguo He, Journal of Financial Economics, 2013, Vol 107, 239-258.
(4) “Convective Risk Flows in Commodity Futures Markets” with Ing-haw Cheng and Andrei Kirilenko, Review of Finance, 2015, Vol 19, 1733-1781.

2. Instability of short-term debt

Publication

(5) “Dynamic Debt Runs” with Zhiguo He, Review of Financial Studies, 2012, Vol. 25, 1799-1843.
(6) “Rollover Risk and Credit Risk” with Zhiguo He, Journal of Finance, 2012, Vol. 67, 391-429.
(7) “Debt Financing in Asset Markets” with Zhiguo He, American Economic Review Papers and Proceedings, 2012, Vol. 102, 88-94.

3. Information frictions in the real assets market

Publication

(8) “Informational Frictions and Commodity Markets” with Michael Sockin, Journal of Finance, 2015, Vol 70, 2063-2098.
(9) “Learning about the Neighborhood: Supply Elasticity and Housing Cycles” with Zhenyu Gao and Michael Sockin, Working paper, 2015.
(10) “Housing Speculation and Supply Overhang” with Zhenyu Gao and Michael Sockin, Working paper, 2016.

4. Financialization of commodity markets

Publication

(11) “Index Investment and Financialization of Commodities” with Ke Tang, Financial Analysts Journal, 2012, Vol. 68, 54-74.
(8) “Informational Frictions and Commodity Markets” with Michael Sockin, Journal of Finance, 2015, Vol 70, 2063-2098.
(12) “Are Commodity Futures Prices Barometers of the Global Economy” with Conghui Hu, Après le Déluge: Reflections on the Financial Crisis in the Spirit of José A. Scheinkman edited by Glen Weyl, Edward Glaeser, and Tano Santos, University of Chicago Press, forthcoming.
(4) “Convective Risk Flows in Commodity Futures Markets” with Ing-haw Cheng and Andrei Kirilenko, Review of Finance, 2015, Vol 19, 1733-1781.
(13) “Why Do Hedgers Trade So Much?” with Ing-haw Cheng, Journal of Legal Studies 43, 2014, S183-207.
(14) “The Financialization of Commodity Markets” with Ing-haw Cheng, Annual Review of Financial Economics, 2014, Vol 6, 419-441.

II. Behavioral finance

Prof. Xiong Wei’s research on behavioral finance includes the following areas:
1. Speculative bubbles
2. Asset pricing with heterogeneous beliefs and welfare criterion
3. Limited investor attention
4. Nonstandard risk preferences
5. Effects of belief distortions in credit expansion and the financial crisis

1. Speculative bubbles

Publication

(15) “Overconfidence and Speculative Bubbles” with Jose Scheinkman, Journal of Political Economy, 2003, Vol. 111, 1183-1219.
(16) “Heterogeneous Beliefs, Speculation and Trading in Financial Markets” with Jose Scheinkman, Paris-Princeton Lectures on Mathematical Finance, Springer, 2003, 217-250.
(17) “Asset Float and Speculative Bubbles” with Harrison Hong and Jose Scheinkman, Journal of Finance, 2006, Vol. 61, 1073-1117.
(18) “Executive Compensation and Short-termist Behavior in Speculative Markets” with Patrick Bolton and Jose Scheinkman, Review of Economic Studies, 2006, Vol. 73, 577-610.
(19) “Pay for Short-Term Performance: Executive Compensation in Speculative Markets” with Patrick Bolton and Jose Scheinkman, Journal of Corporation Law, 2005, Vol. 30, 721-747.
(20) “Advisors and Asset Prices: A Model of the Origins of Bubbles” with Harrison Hong and Jose Scheinkman, Journal of Financial Economics, 2008, Vol. 89,
268-287.
(21) “Speculative Trading and Stock Prices: Evidence from Chinese A-B Share Premia” with Jianping Mei and Jose Scheinkman, Annals of Economics and Finance, 2009, Vol. 10, 225-255.
(22) “The Chinese Warrants Bubble” with Jialin Yu, American Economic Review, 2011, Vol. 101, 2723-2753.

2. Asset pricing with heterogeneous beliefs and welfare criterion

Publication

(23) “Heterogeneous Expectations and Bond Markets” with Hongjun Yan, Review of Financial Studies, 2010, Vol 23, 1433-1466.
(13) “Why Do Hedgers Trade So Much?” with Ing-haw Cheng, Journal of Legal Studies, 2014, Vol 43, S183-207.
(24) “A Welfare Criterion for Models with Distorted Beliefs” with Markus Brunnermeier and Alp Simsek, Quarterly Journal of Economics, 2014, Vol 129, 1711-1752.
(25) “Bubbles, Crises, and Heterogeneous Beliefs,” Handbook on Systemic Risk, edited by Jean-Pierre Fouque and Joe Langsam, Cambridge University Press, 2013, 663-713.
(26) “Differential Reactions of Local and Foreign Investors to Analyst Recommendations” with Chunxin Jia and Yaping Wang, Working paper, 2016, invited for revision by Review of Financial Studies.

3. Limited investor attention

Publication

(27) “Investor Attention, Overconfidence and Category Learning” with Lin Peng, Journal of Financial Economics, 2006, Vol. 80, 563-602.
(28) “Investor Attention and Time-Varying Comovements” with Tim Bollerslev and Lin Peng, European Financial Management, 2007, Vol. 13, 394-422.
(29) “A Tale of Two Anomalies: The Implication of Investor Attention for Price and Earnings Momentum” with Kewei Hou and Lin Peng, Working paper, 2009.

4. Nonstandard risk preferences

Publication

(30) “Prospect Theory and Liquidation Decisions” with Albert Kyle and Hui Ou-Yang, Journal of Economic Theory, 2006, Vol. 129, 273-288.
(31) “What Drives the Disposition and Momentum Effects? An Analysis of a Recent Preference-Based Explanation” with Nicholas Barberis, Journal of Finance, 2009, Vol. 64, 751-784.
(32) “Realization Utility” with Nicholas Barberis, Journal of Financial Economics, 2012, Vol. 104, 251-271.

5. Effects of belief distortions in credit expansion and the financial crisis

Publication

(33) “Wall Street and the Housing Bubble” with Ing-haw Cheng and Sahil Raina, American Economic Review 104, 2014, 2797-2829.
(34) “Credit Expansion and Neglected Crash Risk” with Matthew Baron, Working paper, 2016, invited for revision by Quarterly Journal of Economics.

III. China’s financial system

Although China has become the second largest economy in the world, the development of the financial market is still lagging. In recent years, Prof. Xiong Wei has shifted his research focus to China’s financial system. His research revolves around three important and unique characteristics of China’s financial systems:

1. Inexperienced investors
2. Serious financial friction faced by families and firms
3. Government intervention

Publication

(21) “Speculative Trading and Stock Prices: Evidence from Chinese A-B Share Premia” with Jianping Mei and Jose Scheinkman, Annals of Economics and Finance, 2009, Vol. 10, 225-255.
(22) “The Chinese Warrants Bubble” with Jialin Yu, American Economic Review, 2011, Vol. 101, 2723-2753.
(26) “Differential Reactions of Local and Foreign Investors to Analyst Recommendations” with Chunxin Jia and Yaping Wang, Working paper, 2016, invited for revision by Review of Financial Studies.
(35) “The Chinese Housing Boom” with Hanming Fang, Quanlin Gu, and Li-An Zhou, NBER Macroeconomics Annual, 2015, Vol 30, 105 - 166.
(36) “The Speculation Channel and Crowding Out Channel: Real Estate Shocks and Corporate Investment in China” with Ting Chen, Laura Liu, and Li-An Zhou, Working paper, 2016.
(37) “China’s Model of Managing the Financial System” with Markus Brunnermeier and Michael Sockin, Working paper, 2016.