Portfolio Choice with Non-Fungible Brokerage Cash, co-authored by Professor Ning Zhu, Chair Professor of Finance at the Shanghai Advanced Institute of Finance (SAIF), Shanghai Jiao Tong University (SJTU), and Xindi He, has been accepted for publication by the Journal of Financial and Quantitative Analysis (JFQA), a premier international academic journal in finance.
Standard portfolio-choice models assume that cash is fungible. Drawing on position and transfer records for 46,016 Chinese investors, the study finds otherwise. It classifies money moved in from savings accounts as "cold" and funds recycled from trading as "hot," then constructs a cash-temperature measure to track how these source effects refresh and decay. Controlling for gains and losses, trading intensity, and rebalancing, the authors show that investors direct colder cash toward safer stocks. Quasi-experimental variation created by China's 2016 IPO reform supports a causal reading of the pattern, and a pre-registered experiment links cold framing to loss aversion. A model in which sensitivity to gains and losses depends on cash temperature accounts for the evidence.
About Professor Ning Zhu
Dr. Ning Zhu is a Chair Professor of Finance at the Shanghai Advanced Institute of Finance (SAIF), Shanghai Jiao Tong University. He was previously a Chair Professor at Tsinghua University and a tenured Professor of Finance at UC Davis, as well as a Visiting Professor at Waseda University. From 2008 to 2010, he worked as a senior executive at Lehman Brothers and Nomura Securities, leading teams that achieved top rankings in several Institutional Investor awards.
Professor Zhu's research interests encompass behavioral finance, Chinese macroeconomics and financial markets, short selling, bankruptcy and restructuring, corporate finance, and mergers and acquisitions. He has published more than 50 articles in leading international journals, including the Review of Financial Studies, Journal of Finance, Management Science, and the Journal of Legal Studies. He is the author of the best-selling books The Guaranteed Bubble, The Investors' Enemy, and The Investors' Friend, which have been translated into multiple languages and gained wide recognition. He received the Sun Yefang Financial Innovation Book Award in 2018 and has been named to Elsevier's "Most Cited Chinese Researchers" list for five consecutive years, from 2021 to 2025.
Professor Zhu is a globally recognized expert on China's economy and financial system. He has served as a Faculty Fellow at Yale University and Co-Secretary General of the International Finance Forum, and has been invited to speak at the World Economic Forum in Davos, the Boao Forum for Asia, and other prominent events. He has been interviewed by numerous domestic and international broadcasters, and has advised international organizations, governments, regulatory agencies, and major corporations worldwide.
Professor Zhu received his Ph.D. in Finance from the Yale School of Management in 2003.
