In the absence of market imperfections, the mutuality principle leads to efficient risk sharing and the Pareto optimal asset allocations. With market imperfections such as transaction costs and information asymmetry, risk-sharing becomes costly, and it can even lead to financial crises. We...

As market stabilization funds (MSFs) are usually established to stabilize a short-term stock market disaster, most of them will “retreat” after crashes. However, there is an exception, i.e., the Chinese MSFs, which still hold a large number of shares even after crashes. This paper...

Previous studies rarely discuss the effect of margin trading on future stock price crash risk, though margin trading is often blamed for destabilizing stock market. We propose three possible mechanisms through which margin trading may affect crash risk. Our empirical results show that neither...

Previous studies rarely discuss the effect of margin trading on future stock price crash risk, though margin trading is often blamed for destabilizing stock market. We propose three possible mechanisms through which margin trading may affect crash risk. Our empirical results show that neither...

This study empirically examines, in the setting of insurance companies, the hypothesis that investors facing more operating risk may behave as if they were more risk averse in investment decisions. Specifically, we study how operating risk from underwriting insurance policies affects insurers'...

Xiang Hu Bao (XHB), meaning 'mutual treasury' in Chinese, is a novel online mutual aid platform operated by Alibaba's Ant Financial to facilitate mutual risk sharing of critical illness exposures. XHB reached nearly 100 million members in less than one year since its launch and so far has...