Event Details

Accounting and Finance, Finance Research Seminar by Qifei Zhu, Nanyang Business School. Paper title: Equity lender structure and short-sale constraints: Evidence from mutual fund lending positions

Asst Prof Zhu Qifei | Academic Profile | DR-NTU | Research | NTU Singapore

Abstract

Equity lender structure is concentrated and persistent. Using mutual funds’ positionlevel

equity lending data, we find that most shares on loan are supplied by a small number

of shareholders who lent out the same stock in the past. We argue that this lender

structure is driven by investors’ heterogeneous willingness to lend shares, which is not

captured by conventional lending supply measures. When existing lenders sell their

shares, short sellers struggle to find replacement lenders and get partially squeezed.

Consequently, lending fees spike, and stock prices become less efficient and more likely

to be overpriced. Ex ante, risks associated with a concentrated lender structure are

priced in the equity market.