Yu Yunjun, a 2018 PhD student majoring in finance, published a paper in Economic Research Journal, which is ranked as A+ Chinese journal, in collaboration with Zhang Yilin, an associate professor from the School of Management of Sun Yat-sen University and Peng Yuchao, an associate professor from the School of finance of Central University of Finance and Economics. The topic of the paper is Regulatory Avoidance and Hidden Financial Risks. In School of Finance, students have published academic papers in ranked academic journals both at home and abroad for years, and remarkable results have been achieved through persistent scientific research training.
Abstract of the paper
The historical experience of the financial crisis has shown that the real risks of financial institutions are not necessarily known to the public. Such hidden financial risks can cause regulators to fall into the predicament of lagging actions. The research in this article shows that if the regulator fail to gain insight into the real assets of the bank, the excessively strict requirements on the asset quality of the bank will worsen the asset quality of the bank and induce the bank to deliberately hide the risk, resulting in the secret accumulation and increase of bank’s risk. Additionally, a large number of "bad-loan" companies that should have been liquidated continue to exist in the market, becoming “zombie companies” that inefficiently occupied financial resources. The policy implication of this article is that in the context of the rapid development of shadow banking and the fast evolution of supervision evasion among banks, governance on supervision evasion is not only crucial in preventing financial risks, but also of vital importance in avoiding the secret accumulation or even the sudden outbreaks of financial risks.
Journal Overview
Founded in 1955, Economic Research Journal is a comprehensive economic theory journal sponsored by the Institute of Economics Chinese Academy of Social Sciences and in charge of Chinese Academy of Social Sciences (CASS). In the AMI Comprehensive Evaluation Report on Chinese Humanities and Social Sciences Journal (2018) launched by Chinese Academy of Social Sciences on November 16, 2018, Economic Research Journal continued to be rated as the "top" journal in economics, with a comprehensive impact factor of 10.699 in 2020.
Source: School of finance
