John Kuong 

Assistant Professor of Finance, INSEAD 

Member of Finance Theory Group

CEPR Research Affiliate (FE)

Email: johncfkuong (at) gmail (dot) com; john (dot) kuong (at) insead (dot) edu

CV (last update: August 2023)

Research Interests: Corporate Finance, Financial Intermediation, Information Economics, Market Microstructure

Upcoming presentations, discussions and general updates

Working papers

Dealer Funding and Market Liquidity (with Max Bruche) (REVISED!) [paper on SSRN]

Revise and resubmit, Management Science 

SIX Best Paper Award at SGF conference 2019 Last updated: September 2021 Selected presentations:  FIRS Budapest (cancelled), European Winter Finance Summit 2020, Cambridge Corporate Finance Theory Symposium 2019, EFA 2019*, FTG Summer meeting at Madrid, WFA 2019, FTG Spring meeting at Tepper, CFIC 2019, SGF 2019, EuroFIT@UCL 2018

Abstract:  We consider a model in which dealers intermediate trades between clients and provide immediacy, or, market liquidity. Dealers can exert unobservable search effort to improve the chance of intermediating profitably.  This moral-hazard friction impairs dealers’ ability to raise external finance and hence to compete aggressively with each other in providing liquidity. Market liquidity is limited even for safe assets and more so for assets with higher search cost. To alleviate the financing friction, dealers opt to finance with debt and intermediate in several markets simultaneously. Dealer leverage is therefore endogenous and related to variations in liquidity across otherwise unrelated markets. Our results shed light on how post-crisis regulations influence the provision of immediacy in bond markets.


Monetary Policy and Fragility in Corporate Bond Funds (New!) (with James O'Donovan and Jinyuan Zhang) 

Last updated: July 2023

Revise and resubmit, Journal of Financial Economics 


Selected presentations:  9th Wharton Conference on Liquidity and Financial Fragility, CICF 2023(*), INSEAD Finance Symposium 2023, AFA 2023

Abstract: We document aggregate outflows from corporate bond funds days before and after the announcement of increases in the Federal Funds Target rate (FFTar). To rationalize this phenomenon, we build a model in which funds’ net-asset-values (NAVs) are stale and investors strategically redeem to profit from the mispricing when they learn about the increases of FFTar. Consistent with the model's predictions, we find that stale NAVs and loose monetary policy environments weaken (strengthen) outflows sensitivity to increases in FFTar during illiquid (liquid) market conditions. Our results highlight when and how monetary policy could systematically exacerbate the fragility of corporate bond funds.


Publications

Self-fulfilling Fire Sales: Fragility of Collateralized Short-term Debt Markets + Internet Appendix

The Review of Financial Studies (2021) 34.6: 2910-2948


Winner of Deutsche Bank Prize in Financial Risk Management and Regulation 2014Winner of Best Paper Awards in CSEF 2nd conference on "Bank Performance, Financial Stability and the Real Economy" at Capri, 2015

Funding Constraints and Informational Efficiency (with Sergei Glebkin and Naveen Gondhi)

The Review of Financial Studies (2021) 34.9: 4269-4322

Securitization and Optimal Foreclosure​ (with Jing Zeng) [SSRN] 

Journal of Financial Intermediation (2021) 48: 100885.

When Large Traders Create Noise (with Sergei Glebkin) 

Journal of Financial Economics (2023), 150(2): 103709

The Design of a Central Counterparty (with Vincent Maurin) 

Journal of Financial and Quantitative Analysis, (2023), First View, pp. 1 - 43


Work-in-progress

Sustaining trading relationships with lemons

Market power and agency frictions in delegated investment

Systemic risks in central clearing (with Vincent Maurin)