Publication
1
Networking Behind the Scenes: Institutional Cross-Industry Holdings and Corporate Loan Markets
Jie He, Lantian Liang, Hui Wang, and Han Xia
Management Science, 2023, 70(7).
Jie He, Lantian Liang, Hui Wang, and Han Xia
Management Science, 2023, 70(7).
Click for Abstract
Institutional investors increasingly hold firms in both the industrial and financial sectors. These cross-industry holdings link firms to “outside” banks that they have not borrowed from, creating a network between the two sectors. We show that such networks reduce firms’ loan spreads. This effect is more prominent when cross-holders are actively involved in borrowers’ routine operations and when they have stronger incentives to advocate for borrowers in the loan process. Furthermore, outside banks begin to lend more to firms once the two parties become linked. This network is “behind-the-scenes” because it does not arise from prior interactions between firms and banks, but is instead built through institutions’ cross-holdings.
2
Household Debt Overhang and Human Capital Investment
Gustavo Manso, Alejandro Rivera, Hui Wang, and Han Xia
Journal of Financial Economics, 2025, 172.
Gustavo Manso, Alejandro Rivera, Hui Wang, and Han Xia
Journal of Financial Economics, 2025, 172.
Click for Abstract
Unlike labor income, human capital is inseparable from individuals and does not completely accrue to creditors, even at default. As a result, human capital investment should be more resilient to "debt overhang" than labor supply. We develop a dynamic model displaying this important difference. We find that while both labor supply and human capital investment are hump-shaped in household indebtedness, human capital investment declines less aggressively as indebtedness builds up. This is especially the case when human capital depreciation rates are lower. Importantly, because skills acquisition is only valuable when households expect to supply labor in the future, the anticipated greater reduction in labor supply due to debt overhang back-propagates into a reduction in skills acquisition ex ante. Using longitudinal data, we provide empirical support for the model.Working Paper
3
Student Loans and Labor Supply Incentives
Gustavo Manso, Alejandro Rivera, Hui Wang, and Han Xia
Gustavo Manso, Alejandro Rivera, Hui Wang, and Han Xia
- Covered by LSE USAPP Blog
Click for Abstract
We develop a dynamic household finance model showing that student loans—nondischargeable in the U.S. bankruptcy—alleviate the well-documented debt overhang in labor supply decisions. Non-dischargeability mutes opportunities for households to strategically reduce labor supply at the expense of creditors, thus correcting incentive distortions. This corrective effect, however, is partially undone by Income-Driven Repayment (IDR) plans, which set student loan payments formulaically regardless of outstanding balance. IDR thus allows households to pseudo-discharge" student debt and re-activates debt overhang. We supplement our model with empirical analyses and uncover potentially unintended consequences of proposed reforms in student loans.
4
Financial Analysts' Response to the Revelation of Brokerage Houses' ESG Incidents
Hui Wang, Han Xia, and Luo Zuo
Hui Wang, Han Xia, and Luo Zuo