Xiang Gao, CFA, FRM, CAIA, is currently the Head of Research Center of Finance at Shanghai Business School, Shanghai, China. His research interests focus on international finance, financial markets, risk management and corporate governance. He has published in journals including the Economic Journal, Journal of Comparative Economics and Journal of Economic Dynamics and Control. He obtained his Ph.D. degree of economics from the Iowa State University at 2011, his master of science degree in economics from the Hong Kong University of Science and Technology at 2006, and his bachelor degree in international economics and trade from Shanghai Jiao Tong University at 2005. Dr. Gao has also assumed the role of China Chapter executive of the Chartered Alternative Investment Analyst Association since 2014.
This paper provides a rationale for adopting quantitative buffer capital, designed to absorb variations due to measurement errors, especially those originating from the estimation risk.