3. "The divergent preferences and economic consequences of benchmark replacement", (draft will be updated soon!)

Establishing and maintaining financial benchmarks can generate positive externalities by reducing information asymmetry and other contracting costs.  This paper studies the replacement of the old financial benchmark (LIBOR) and the succession of the new one (SOFR) as a lobbying outcome of banks with divergent capital structures. Large banks’ efforts to steer the market standard towards SOFR were driven by their reliance on correlated secured repo funding, in contrast with smaller banks that rely primarily on unsecured overnight bank funding. I document large adverse competitive effects on smaller banks following the transition, including reduced equity returns and higher interest spreads on private loans, due to their further exposure to interest rate mismatch risks. Consequently, this shift undermined the competitive position of smaller lenders in the debt market and resulted in a loss of market share following the adoption of SOFR.

2. "Contractual innovation and the evolution of boilerplate in credit agreements", with Justin Murfin

We use the terms and definitions sections from 21,380 corporate credit agreements to examine the evolution of boilerplate contracting from 1996-2019. We find large year-to-year changes in the preferred boilerplate language, but over time, the cross-sectional variation in language has shrunk dramatically. If improvements in boilerplate derive from experimentation in prior year contracts, what are the incentives to introduce new language? We find a large discount in the secondary market for novel contracts, even when those contracts are prescient of future changes to boilerplate. Small banks are more prone to produce off-market contracts, and as a result, have led to more innovation. At the same time, the novelty of small bank contracts is attenuated when public models of boilerplate are available and when standards move slowly, consistent with some amount of accidental innovation by small banks. 

1. "Yes, standing committee: promotion under collective leadership in CCP"

In the post-Mao era, the Chinese Communist Party (CCP) has operated according to the collective leadership decision mechanism, which encourages the CCP Politburo Standing Committee to rule by consensus and prevent authoritarianism. To study the role of connections in the promotion of the Central Committee political elites under the mechanism, we construct a social network through shared hometown, college alumni, and overlapped working experience. We further separate the network into vertical and horizontal connections. We show that vertical connections to incumbent Standing Committee members increases a candidate's likelihood of promotion to the Politburo and being assigned to a prestigious position. Whereas, horizontal connections to the peer Central Committee members could harm the candidate's opportunity in promoting to the Politburo and their job assignments. In order to investigate the precise majority rule under the collective leadership, we consider these deliberations and resulting assignments as a coalitional game among incumbent members of the Standing Committee. The results suggest that the Standing Committee follows a super-majority rule when deciding the vice-provincial-ministerial above-level appointment. However, the estimated majority rules are relatively lower during the presidencies of Deng and Xi, compared to Jiang and Hu.

1. "The power and influence of rating agencies with insights into their misuse", with Kaushik Basu

Economic Modelling, 2022

The paper investigates the source of power and influence of agencies engaged in rating and ranking nations. Their power and knowledge are puzzling since the economics profession is itself split about what constitutes good fundamentals for an economy. Based on some stylized facts of the Ease of Doing Business rankings, the paper constructs a model that shows ratings can contribute to creating a focal point for investors, prompting behavior that makes the ratings come out right in retrospect. The paper then comments on the real-world implications of the model, possible extensions of the theory, and how the power to create focal points can be misused by organizations engaged in rating and ranking nations.