题目：Overpricing in Municipal Bond Markets and the Unintended Consequences of the Administrative Solutions: Evidence from China

演讲人：刘晓蕾（北京大学光华管理学院 教授）

时间：2021年6月21日（周一）12:00-13:00

地点：同济大厦A楼306室

Abstract: 

China allows local governments to issue real municipal bonds since 2014. However, many of the municipal bonds were issued with a yield equal to or even lower than that of treasury bonds, showing an obvious overpricing. To resolve the overpricing problem in the primary market of municipal bonds, the regulatory authority set a lower bound for the issuing yield spread. In this paper, we explore the reasons for the overpricing of municipal bonds and investigate the impacts of the pricing restrictions. We find that municipal bonds issued in provinces where bond underwriters hold more shares in local treasury cash management and where SOEs are more important in the local economy have a lower issuing yield spread, a larger pricing difference between the primary and secondary markets, and worse liquidity after issuance. The results are consistent with the interpretation that bond underwriters bid up the primary market prices in exchange for other benefits from local governments. We also find that after the enforcement of lower bound restrictions, even bonds which are not supposed to be constrained by the lower bounds are priced at the boundary. The primary market of municipal bonds loses price discovery entirely. More importantly, risky bonds, which are now even more “overpriced”, have longer maturity, suggesting that local governments take advantage of the “mispricing” in their issuance choices. These findings offer important policy implications: Administrative restrictions intending to solve mispricing problems may cause even more serious mispricing.

个人简介：

Laura Xiaolei Liu is Boya Distinguished Professor of Peking University, and a Professor of Finance and Accounting at Guanghua School of Management, Peking University. She is the Chair of the Department of Finance, Guanghua School of Management, and Director of Blockchain Lab and Fintech Lab. She received her PhD from University of Rochester. Her research interest is capital markets and empirical corporate finance.  Her work has been published in leading academic journals including Journal of Political Economy, Journal of Finance, Journal of Financial Economics, Review of Financial Studies, Journal of Monetary Economics, and Management Science. In recent years her study has focused on China related topics. She received best paper awards and research excellence award many times. Before joining Guanghua, Professor Liu taught at Hong Kong University of Science and Technology and received tenure there.