Latest Research Publications
Research Insights
Global Scholars
Impact Stories
HKEJ Column
FT Chinese Column
In the Media
Does Liquidity Management Induce Fragility in Treasury Prices? Evidence from Bond Mutual Funds
Does Liquidity Management Induce Fragility in Treasury Prices? Evidence from Bond Mutual Funds
Mutual funds investing in illiquid corporate bonds actively manage Treasury positions to buffer redemption shocks. This liquidity management practice can transmit non-fundamental fund flow shocks onto Treasuries, generating excess return volatility. Consistent with this hypothesis, we find that Treasury excess return volatility is positively associated with bond fund ownership, and this pattern is more pronounced among funds conducting intensive liquidity management. Causal evidence is provided by exploiting the U.S. Securities and Exchange Commission’s 2017 Liquidity Risk Management Rule. Evidence also suggests that the COVID-19 Treasury market turmoil was attributed to intensified liquidity management, an unintended consequence of the 2017 Liquidity Risk Management Rule.

The Interactions of Customer Reviews and Price and Their Dual Roles in Conveying Quality Information
The Interactions of Customer Reviews and Price and Their Dual Roles in Conveying Quality Information
Customer reviews help communicate product information, but their effectiveness may suffer from selection bias (i.e., depending on factors, such as the individual experience and price, not all consumers may voluntarily write reviews). Consequently, a seller may have to resort to additional means (e.g., signaling through price in the context of an experience good) to convey its quality. This paper develops an analytical model to investigate the interaction of customer reviews and price with the presence of selection bias in marketing an experience good with uncertain quality to consumers. Our analysis reveals the dual roles played by both customer reviews and price in communicating quality information. On one hand, customer reviews may either directly convey product information with unbiased distribution of reviews or facilitate price signaling when reviews are biased because of selection. On the other hand, price may be adjusted to mitigate the selection bias of reviews to make them more informative, and it may also signal quality directly in the presence of review bias. As a result, we show that bias in reviews may actually benefit consumers without compromising information communication as the incentive to reduce review selection bias makes it credible and profitable for the high-quality seller to signal its type by undercutting the price that would be set if it is of low quality. We then extend our analysis to examine the information, profits, and welfare impacts of several important design elements of a review system as well as the impact of consumers’ aversion to risk. Finally, the implications of our findings on the management of user-generated content and pricing are discussed.

Manipulation, Panic Runs, and the Short Selling Ban
Manipulation, Panic Runs, and the Short Selling Ban
Short selling regulation has been a longstanding topic of debate in financial markets, particularly during times of crisis. While proponents argue that short selling aids in price discovery and market efficiency, critics raise concerns about manipulative short selling practices that can destabilize markets. This paper presents a theoretical model to analyze the impact of short selling, specifically manipulative short selling (MSS), on bank runs and efficiency. The model demonstrates that MSS can emerge as an equilibrium outcome driven by uninformed speculators seeking to profit from artificially depressing stock prices. The prevalence of MSS is influenced by the level of informed trading and coordination friction among creditors. We find that short selling bans can enhance welfare by mitigating the negative effects of MSS, particularly in scenarios with high coordination frictions. We also provide policy and empirical implications.

Carbon-Transition Risk and Net-Zero Portfolios
Carbon-Transition Risk and Net-Zero Portfolios
Key Takeaways Net-zero portfolios (NZPs), managing over $130 trillion USD in assets, align financial performance with climate goals. These portfolios reward firms that actively reduce emissions while excluding those lagging behind, driving market incentives for decarbonization. The study introduces distance to exit (DTE), a forward-looking metric that measures a firm’s risk of exclusion from NZPs based on its carbon footprint and decarbonization efforts. Firms with higher DTEs—seen as safer from exclusion—tend to have higher valuations but lower expected returns, highlighting the market’s pricing of carbon-transition risks. DTE serves as both a risk measure and a catalyst for action, incentivizing firms to accelerate decarbonization to remain in NZPs, while enabling portfolios to achieve up to 95% reductions in carbon intensity without sacrificing sector diversification. Source Publication: 
Trade, Trees, and Lives
Trade, Trees, and Lives
Key Takeaways The agricultural export value of Brazil has quadrupled over the last two decades due to rising global demand. Brazil’s agricultural export boom drives deforestation: between 1997 and 2019, trade-induced agricultural expansion led to the loss of 3.6 million hectares of forest. Trade-induced deforestation causes severe health consequences: it results in over 700,000 premature deaths, primarily from cardio-respiratory diseases linked to pollution from deforestation in upwind areas. The economic cost of these deaths is estimated at $513 billion USD—about 18% of Brazil’s total agricultural export value during the same period. These findings highlight the negative health impacts of trade-induced deforestation and the resulting regional inequality, because mortality costs and economic benefits are not always shared by the same populations. Source Publication: 
Reducing Carbon Using Regulatory and Financial Market Tools
Reducing Carbon Using Regulatory and Financial Market Tools
Key Takeaways This study develops a theoretical framework to explore how carbon taxes and financial market tools (e.g., sustainability-linked loans and bonds) interact in reducing carbon emissions. Carbon taxes remain the most effective tool for achieving emission reductions and increasing welfare but are often politically constrained. Carbon-contingent financing provides an alternative incentive for standard agents to adopt green technologies, but its effectiveness depends on the financial resources of environmentally motivated agents who are funding the transition. Although carbon taxes and market-based solutions can coexist, carbon-contingent financing may undermine political support for taxes, potentially reducing their overall effectiveness in addressing emissions. The model’s predictions emphasize the need for a balanced climate strategy, whereby carbon taxes and financial market solutions complement each other by targeting different regions or sectors with distinct characteristics. Source Publication: 
Learning to Coordinate in Firms’ Behaviours  – Dr. Jasmine Yu HAO
Learning to Coordinate in Firms’ Behaviours – Dr. Jasmine Yu HAO
While computer languages may sound alien to economics, I aim to showcase that good programming skills are conducive not limited to economic research, it can also open up endless career possibilities for you in the business world.

To Imagine the Future of Digital Currencies – Dr. Yang YOU
To Imagine the Future of Digital Currencies – Dr. Yang YOU
As a teacher, I will push myself to understand the expectations of local employers' and the market dynamics of Hong Kong.

From Quantum Physics to Quantitative Marketing – Dr. Chu (Ivy) Dang
From Quantum Physics to Quantitative Marketing – Dr. Chu (Ivy) Dang
As a science person, I am impressed by our students' strong business acumen. But as a teacher, other than teaching them how to use quantitative tools to make scientific claims, I also hope that I can encourage them to continue to stay inquisitive about the world and apply their classroom knowledge for the betterment of the society.

How Can Hong Kong Retailers Survive the Surge of Mainland E-commerce?
How Can Hong Kong Retailers Survive the Surge of Mainland E-commerce?
Recently, mainland e-commerce giants like Taobao, JD.com, and Pinduoduo have ramped up their efforts to include the Hong Kong market in their free shipping zones. In the past, Hong Kong residents had to use intermediary services to receive their orders, but the newly launched one-stop shopping services are naturally very popular.
HK Tourism IP and Pop Mart: A Lesson from Labubu
HK Tourism IP and Pop Mart: A Lesson from Labubu
Hong Kong saw a strong start in its tourism sector in the first quarter, and during the peak visitor numbers during China's May Day holiday. That said, the boom hasn't resulted in increased spending—visitors even found ways to save money, such as staying overnight at fast-food outlets. How can Hong Kong break the cycle of high visitor numbers but low revenue? Is there anything the industry could learn from Pop Mart, the company that hit overnight success in reputation and sales?
The Trade War and Macroeconomic Identities
The Trade War and Macroeconomic Identities
Earlier, the U.S. and China engaged in tariff talks in Geneva and unexpectedly reached a consensus for a truce, temporarily lowering tariff rates to levels prior to the so-called "Liberation Day" in the U.S. However, the global situation remains difficult to restore to its previous state. U.S. President Trump has been employing so-called negotiation tactics, fluctuating offers between high and low, and using both genuine and deceptive strategies to create negotiation space for his side. Yet, due to a lack of confidence and logical inconsistencies, the trade war resembles a poorly executed circus act, pushing the global economic policy uncertainty index to a historic high.
Revolutionizing Care: Innovative Healthcare Models Transforming Emerging Economies
Revolutionizing Care: Innovative Healthcare Models Transforming Emerging Economies
Despite resource constraints and pressures coming from a growing population, can emerging economies improve healthcare access and reduce costs – without sacrificing the quality of healthcare services? Based on field visits and joint research on public health, Prof. Sundara Natarajan Panchanatham, Assistant Professor in Innovation and Information at HKU Business School, revealed that medical practices in emerging economies “can transform healthcare systems, making them more resilient and responsive to the demands of their populations.”
Impact of the AI Industrial Revolution on Labor Market
Impact of the AI Industrial Revolution on Labor Market
Have you noticed how, historically, industrial revolutions across various nations mainly impacted low-income jobs? What’s different now is that the current wave in artificial intelligence seems different. AI not only automates entry-level positions but also has the potential to replace high-skilled, high-income roles. According to the International Monetary Fund (IMF), AI could affect up to 40% of global employment. That figure could be as high as 60% in developed economies like Hong Kong.
Silver Lining of Trade War 2.0 for the Chinese Economy
Silver Lining of Trade War 2.0 for the Chinese Economy
Will consumers pay more because of double tariffs from China due to the trade war? Prof. Heiwai Tang, Associate Dean of HKU Business School and Director of the Asia Global Institute, offered his perspective on how the trade war has placed foreign companies in China at the centre of a double-tariff squeeze. He was included in a Financial Times article on the broader implications for businesses and economies worldwide.
How Can Hong Kong Retailers Survive the Surge of Mainland E-commerce?
How Can Hong Kong Retailers Survive the Surge of Mainland E-commerce?
Recently, mainland e-commerce giants like Taobao, JD.com, and Pinduoduo have ramped up their efforts to include the Hong Kong market in their free shipping zones. In the past, Hong Kong residents had to use intermediary services to receive their orders, but the newly launched one-stop shopping services are naturally very popular.
Corporate Innovation: Motivations and Challenges
Corporate Innovation: Motivations and Challenges
Companies need to understand the currently observable technologies and consider whether to apply these technologies directly or to conduct further research and development. Second, the application of design thinking is crucial, as it helps businesses achieve cross-disciplinary innovation and conduct diverse experiments based on market insights. Third, the management culture and internal management models of companies are also very important, as these factors can facilitate the advancement of innovation projects.

HK Tourism IP and Pop Mart: A Lesson from Labubu
HK Tourism IP and Pop Mart: A Lesson from Labubu
Hong Kong saw a strong start in its tourism sector in the first quarter, and during the peak visitor numbers during China's May Day holiday. That said, the boom hasn't resulted in increased spending—visitors even found ways to save money, such as staying overnight at fast-food outlets. How can Hong Kong break the cycle of high visitor numbers but low revenue? Is there anything the industry could learn from Pop Mart, the company that hit overnight success in reputation and sales?