On 22 January 2026, the Faculty of Finance at the City University of Macau organized the tenth Academic Salon at the Golden Dragon Campus. This academic salon invited Mr. Stephen Fan, PhD student from University of Sydney, as the speaker. His research paper titled “Reaching for Yield in Turbulent Times: Bank Liquidity Creation under Geopolitical Risk”.
This paper using a panel of commercial banks from 40 countries between 2001 and 2023, find that heightened geopolitical risk (GPR) markedly increases bank liquidity creation. By exploiting the 2022 Russia–Ukraine war as a quasi-natural experiment, this paper identifies this effect through a difference-in-differences framework that leverages both geographic exposure and trade linkages with the conflict region. The increase in liquidity creation is primarily driven by profit: banks expand loan issuance, reduce cash holdings, and earn higher interest margins and returns during periods of increased geopolitical tension. The effect is more pronounced among larger, more profitable banks in competitive banking systems, but weakens during banking crises. These findings highlight the strategic role of banks in responding to geopolitical risk, positioning GPR as a key external driver of financial intermediation.
Mr. Fan, is currently a PhD candidate at the University of Sydney Business School. He specializes in Banking and FinTech and his research interests include fintech-driven lending, bank regulation, institutional investors and corporate finance. He has published articles in Journal of International Financial Markets, Institutions and Money, and Journal of Behavioral and Experimental Finance
In this academic salon, Mr. Fan shared his latest research findings with the Faculty of Finance, broadening the academic scope of the faculty. The Faculty of Finance Academic Salon at the City University of Macau is a platform for exchanging academic ideas and enhancing academic awareness. The Salon focuses on finance and economics, inviting experts from academia and the financial industry to discuss cutting-edge research and share industry development trends, aiming to bring new academic experiences and thinking models to the faculty and students of the university. Through academic activities like the academic salon, the Faculty of Finance provides a better academic platform for graduate students and encourage further exploration and research of academic issues among faculty and students.