Essays in bank capital structure

This thesis provides an in-depth discussion on banks’ capital structure which has drawn very little attention from the literature. It consists of three major empirical essays. The first essay (Chapter III) reviews the major conclusions drawn from the traditional corporate finance literature that has at length examined the capital structures of non-financial firms, while compares their findings with the limited work on the leverage decisions of banking firms. It aims to provide an insight into the factors that actually govern banks’ capital choices, cast doubt on whether capital requirements are binding and primarily decide the bank leverage, and introduce the core assumption of this thesis – information asymmetry as an important determinant of capital structure decisions. The second essay (Chapter IV) empirically investigates the effects of information asymmetry on capital structure adjustments of US bank holding companies (BHCs) during 1986 to 2015. By identifying BHCs with bankrupt subsidiaries and arguing that their managers possess better knowledge than market investors concerning the failure of their subsidiaries, this chapter disentangles the real effect of private information on the capital structures of holding banks. The results show that subsidiary failure significantly affects financial policies of the parent companies. Specifically, BHCs increase leverage as early as one year prior to the failure of their subsidiaries, and substantially lower leverage after subsidiary failure. Further tests document that the parent BHCs increase not only debt borrowing but also liquidity assets, and curtail lending in advance to avoid further liquidity and financial constraint problems after their subsidiary failure. Examinations on the dynamic patterns of these BHCs’ performance around the subsidiary failure time confirm a smoother performance transition. The third essay (Chapter V) adds to the evidence in Chapter IV and discusses the information asymmetry effect by identifying a different treatment group - BHCs with subsidiaries engaging in M&A activities. The findings lend further support to the core assumption in this thesis. The chapter also finds the indication that financial constraints of BHCs are on average mitigated following their subsidiaries receiving capital infusion following the M&A deals. Overall, this thesis has important implications for the public to understand various incentives that banks may have in making their capital structure decisions

The Basel III net stable funding ratio adjustment speed and systemic risk

The theory on the timing of liquidity trades highlights two contrasting rational expectations equilibria for the liquidity adjustment speed effect, namely an immediate-trading equilibrium (trade at the onset of the liquidity shock) and a delayed-trading equilibrium (trade at the last resort). Using a partial adjustment model and an annual data sample of US bank holding companies from 1991 to 2012, we investigate the effect of Net Stable Funding Ratio (NSFR) adjustment speeds on systemic risk. We find that banks with the immediate-trading equilibrium tend to adjust the NSFR quickly in response to the Basel III liquidity requirement, thereby, reducing systemic risk. With the same level of the NSFR, our findings suggest that only the adjustment speed exerts a negative impact on systemic risk. Our evidence shows that small banks strengthen the effects of the negative impact of the NSFR adjustment speed on systemic risk. Our study sheds light on a real-time indicator of the NSFR for Basel III revisions before its implementation in 2018

Searching for Compact Object Candidates from LAMOST Time-Domain Survey of Four K2 Plates

The time-domain (TD) surveys of the Large Sky Area Multi-Object Fiber Spectroscopic Telescope (LAMOST) yield high-cadence radial velocities, paving a new avenue to study binary systems including compact objects. In this work, we explore LAMOST TD spectroscopic data of four K2 plates and present a sample of six single-lined spectroscopic binaries that may contain compact objects. We conduct analyses using phase-resolved radial velocity measurements of the visible star, to characterize each source and to infer the properties of invisible companion. By fitting the radial velocity curves for the six targets, we obtain accurate orbital periods, ranging from $\sim$ (0.6-6) days, and radial velocity semi-amplitudes, ranging from $\sim$ (50-130) km s$^{-1}$. We calculate the mass function of the unseen companions to be between 0.08 and 0.17 $M_{\odot}$. Based on the mass function and the estimated stellar parameters of the visible star, we determine the minimum mass of the hidden star. Three targets, J034813, J063350, and J064850, show ellipsoidal variability in the light curves from K2, ZTF, and TESS surveys. Therefore, we can put constraints on the mass of the invisible star using the ellipsoidal variability. We identify no X-ray counterparts for these targets except for J085120, of which the X-ray emission can be ascribed to stellar activity. We note that the nature of these six candidates is worth further characterization utilizing multi-wavelength follow-up observations.Comment: 13 pages, 6 figures, accepted for publication in The Astronomical Journa

Transcriptome and network analyses reveal key pathways and genes involved in response to carotenoid deposition in scallop muscle

Carotenoids are essential nutrients for humans and animals, and carotenoid content has become an important trait to evaluate the nutritional value of many cultured animals. Marine animals provide humans with diverse carotenoids, and developing carotenoid-enriched varieties has been the focus of marine animal breeding. Understanding the molecular mechanism of carotenoid deposition could benefit marine animal breeding for carotenoid content improvement. In the present study, transcriptomic analysis of adductor muscle was performed between Yesso scallop (Patinopecten yessoensis) with white muscle (WM) and carotenoid-enriched orange muscle (OM). A total of 683 differentially expressed genes (DEGs) were identified, with 302 and 381 genes being up- and down-regulated in OM scallop. Gene co-expression network analysis identified four carotenoid accumulation−related modules, including three up-regulated modules and one down-regulated module. The genes in up-regulated modules mainly participate in the pathways of translation and transcription (MEgreen), immune system (MElightyellow), and lipid metabolism (MEpink), while the down-regulated module is mainly enriched with genes involved in various metabolic pathways (MEturquoise). As the causal gene responsible for muscle coloration in scallop, PyBCO-like 1 is the hub gene of MEturquoise and showed strong connectivity with NR2F1A, a transcriptional factor involved in the regulation of retinoic acid. In addition, the up-regulated DEGs, including WDR3, RPP29, TBL3, RIOK2, and NOB1 from “ribosome biogenesis”, HSP70s and HSP702Bs from “antigen processing and presentation”, and ACOX1 from “PPAR signaling pathway” were identified as hub genes, indicating the potential regulatory role of these genes and pathways in response to carotenoid accumulation. Our data contribute to a deeper understanding of the regulatory and response mechanisms of carotenoid accumulation in marine animals

Does subsidiary bank failure affect parents’ capital decisions? Evidence from US bank holding companies

I explore the dynamics of capital structure decisions of US bank holding companies (BHCs) around the years of their subsidiary bank failures. I find that financial policies of BHCs are significantly distorted by the failure of their subsidiary banks. Specifically, affected BHCs raise leverage ratios as early as one year prior to the failure of their subsidiaries, and then reduce their leverage following the failure, with this result stronger for small or poorly capitalized holdings and weaker for one-bank holding companies or holdings that have less than full ownership of their subsidiaries. Moreover, BHCs with subsidiary failure also hoard cash or liquidity assets, and cut lending prior to the failure. Overall, the findings are consistent with my theory that BHCs boost their financing to offset the shortfalls in internal funds prior to their subsidiary failure due to more capital funds being transferred to distressed subsidiaries as mandated by the “source of strength” regulation

Preparation and electrochromic/energy storage properties of vanadium doped tungsten oxide nanowires

The ionic radius of V element ion, which is in the same group as Nb, is slightly smaller than that of W ion. Doping V element can improve the ion diffusion rate and structural stability of tungsten oxide nanowires. V-doped tungsten oxide nanowire films were prepared by magnetron sputtering and hydrothermal methods. The effects of different V doping levels on the morphology, composition, and electrochromic properties of samples were investigated using field-emission scanning electron microscopy, X-ray diffraction, transmission electron microscopy, X-ray photoelectron spectroscopy and electrochemical measurement equipment. The results show that the optical properties of samples are improved by appropriate V doping. When the V doping level is 0.1% (atom fraction), the tungsten oxide film exhibits the best electrochromic performance. Factors such as interplanar spacing, strengthening of V—O bonds and oxygen vacancy concentration are key factors affecting the electrochromic performance of tungsten oxide films. This work will provide useful references for the study of V-doped tungsten oxide nanowire structures as electrochromic materials and devices

Searching for Compact Object Candidates from LAMOST Time-domain Survey of Four K2 Plates

The time-domain (TD) surveys of the Large Sky Area Multi-Object Fiber Spectroscopic Telescope (LAMOST) yield high-cadence radial velocities, paving a new avenue to study binary systems including compact objects. In this work, we explore LAMOST TD spectroscopic data of four K2 plates and present a sample of six single-lined spectroscopic binaries that may contain compact objects. We conduct analyses using phase-resolved radial velocity measurements of the visible star to characterize each source and to infer the properties of invisible companion. By fitting the radial velocity curves for the six targets, we obtain accurate orbital periods, ranging from ∼(0.6 to 6) days, and radial velocity semiamplitudes, ranging from ∼(50 to 130) km s ^−1 . We calculate the mass function of the unseen companions to be between 0.08 and 0.17 M _⊙ . Based on the mass function and the estimated stellar parameters of the visible star, we determine the minimum mass of the hidden star. Three targets—J034813, J063350, and J064850—show ellipsoidal variability in the light curves from K2, ZTF, and TESS surveys. Therefore, we can put constraints on the mass of the invisible star using the ellipsoidal variability. We identify no X-ray counterparts for these targets except for J085120, of which the X-ray emission can be ascribed to stellar activity. We note that the nature of these six candidates is worth further characterization utilizing multiwavelength follow-up observations