Jingfeng Zhang

Jingfeng Zhang

Job Market Candidate

Department of Economics

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Languages
Cantonese, English, Mandarin
Key Expertise
Macroeconomics

About me

Jingfeng is a PhD candidate in the Department of Economics. He is on the job market in 2024/25. He holds a BA in Economics from the University of Cambridge, and an MSc in Economics from LSE. He has worked as a Summer Analyst in IBCM division at Credit Suisse and as an Intern at CICC Global Institute.

His main research interests are macroeconomics and finance, with a focus on financial frictions, debt contracting, and credit relationships. His job market paper analyses how credit relationships affect firms' access to earnings-based versus asset-based credits.

Contact Information

Email
j.zhang95@lse.ac.uk

Office Address
Department of Economics
London School of Economics and Political Science
Houghton Street, London WC2A 2AE

Contacts and Referees

Placement Officer
Matthias Doepke

Supervisor
Francesco Caselli

References
Francesco Caselli
Department of Economics
London School of Economics and Political Sciences
Houghton St, London WC2A 2AE
f.caselli@lse.ac.uk

Maarten De-Ridder
Department of Economics
London School of Economics and Political Sciences
Houghton St, London WC2A 2AE
m.c.de-ridder@lse.ac.uk

Xiaolan Fu
Oxford Department of International Development
Queen Elizabeth House
3 Mansfield Road, Oxford OX1 3TB
xiaolan.fu@qeh.ox.ac.uk

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Job Market Paper

Credit Relationships and Dynamic Credit Constraints.

This paper presents microeconomic evidence from the U.S. syndicated loan market showing that as a credit relationship between a lender and a borrower strengthens, borrowing is more likely to be based on a firm's earnings rather than physical assets as collateral. I rationalize this in a model with limited commitment and information asymmetry, in which heterogeneity in relationship status leads to heterogeneous borrowing constraints. In a credit relationship, access to earnings-based credit increases over time because of a learning mechanism. The lender learns about the borrower's private information through repeated interactions and so updates their beliefs. This leads to a dynamic borrowing constraint for the firm, with a switch from collateral-based to earnings-based constraints as the relationship develops. Empirically, I find that the use of loan covenant, which increases credit supply by more than collateral use, increases as the lender-borrower relationship matures. Moreover, covenants tend to replace collateral requirements in a relationship. This provides direct evidence of a dynamic credit constraint in relationship lending, and demonstrates a new channel through which relationships increase credit supply by expanding access to earnings-based contracts. Finally, the effect of relationships on access to earnings-based credits is larger for smaller, typically more informationally opaque firms, underscoring the importance of the learning mechanism I Link to paper.

Publications and Research

Working Papers

Project Heterogeneity and Financial Frictions in Long-Term Credit Relationships.

Early-Stage Technology Acquisitions under Market Competition and Information Asymmetry, with Xiaolan Fu, Du Liu and Yu Xiong.

 

Works in Progress

Dynamic Credit Constraints and Macroeconomic Fluctuations.