Recently, The Review of Financial Studies, a world-class journal, published “The Collateralizability Premium”. It was co-authored by Professor Jun Li, Assistant Professor at Shanghai Advanced Institute of Finance (SAIF) at Shanghai Jiao Tong University (SJTU) in collaboration with: Hengjie Ai of the Carlson Business School of University of Minnesota, Kai Li of Hong Kong University of Science and Technology, and Christian Schlag of Frankfurt University. The Review of Financial Studies (RFS) is one of the Top 3 international financial journals in the world, published by Oxford University Press on behalf of The Society for Financial Studies.
The paper was inspired by literature review on financial friction. After the financial crisis, there were a large number of papers and models about financial friction in macroeconomic literature, but literature focusing on the impact of financial friction on cross-sectional stock returns was limited, especially on collateral-back lending. Therefore, Professor Li and his collaborators focused upon the friction of collateral-back lending in order to seek out the connection between collateralizability premium and company characteristics.
