Social and Behavioral Sciences Commons^™

How To Understand China's Approach To Central Bank Digital Currency?, Heng Wang

Research Collection Yong Pung How School Of Law

China's central bank digital currency (CBDC), digital yuan or e-CNY, is likely to profoundly affect the international financial system. China's CBDC is fast evolving. Understanding the influencing factors of China's CBDC will likely be crucial to explore its future direction. Major influencing factors include (i) China's perception and conception of regulation and technology, (ii) complementarity between China's preferences and CBDC development, (iii) domestic and international legitimacy, and (iv) institutional development. This paper argues that these influencing factors contribute to China's likely approach of selectively reshaping the international financial system. Given the potential wide-ranging implications of the introduction of CBDC globally, …

Chinese Yuan Interest Rate Swap Yields, Tanweer Akram, Khawaja Mamun

WCBT Faculty Publications

This paper models the dynamics of Chinese yuan–denominated long-term interest rate swap yields. It shows that the short-term interest rate exerts a decisive influence on the long-term swap yield after controlling for various macrofinancial variables, such as core inflation, the growth of industrial production, the percent change in the equity price index, and the percentage change in the Chinese yuan exchange rate. The autoregressive distributed lag approach is applied to model the dynamics of the long-term swap yield. The findings reinforce and extend John Maynard Keynes’s conjecture that in advanced countries, as well as emerging market economies such as China, …

China: Reserve Requirements, 2015–2016, Carey K. Mott

Journal of Financial Crises

After China devalued the renminbi against the US dollar in August 2015, Chinese equity markets experienced a significant drop that spilled into international markets. The People’s Bank of China (PBOC) adjusted the reserve requirement ratio (RRR) five times between February 2015 and October 2015: three times before the market turmoil, to allocate credit to preferred sectors, and twice in response to the crisis to release liquidity into the financial system. Throughout this cycle, the central bank applied lower RRRs to rural credit institutions, agricultural lenders, leasing and financing companies, and other sectors in which government policy promoted lending. Although the …

China: Reserve Requirements, Gfc, Carey K. Mott

Journal of Financial Crises

In 2008, China experienced several natural disasters that slowed economic growth, and fearing contagion from the Global Financial Crisis (GFC), the central bank cut the reserve requirement ratio (RRR) three times for large financial institutions, to 15.5%, and four times for small and medium-size financial institutions, to 13.5%. This monetary easing, combined with a USD 586 billion fiscal stimulus package, caused explosive credit growth in China. One year after these RRR cuts, the central bank hiked the ratio 12 times, to a historically high 21.5% for large banks in June 2011; however, it maintained a different ratio for rural credit …

Sandwiched Between A Rock And A Hard Place?, Thomas Lam, David Fernandez

Sim Kee Boon Institute for Financial Economics

The policy gap between US and China is likely to be widening further, potentially raising and unevenly distributing the risks of negative spillovers for Asia and the rest of the world.

Finance And Ideology: The Firm-Level Channels, Hao Liang, Rong Wang, Haikun Zhu

Research Collection Lee Kong Chian School Of Business

We provide firm-level evidence on how politicians’ ideologies affect economic outcomes and financial development by exploring a unique setting of ideological discontinuity in China from Maoism to Dengism around 1978. We find the ideological exposure during a politician’s early adulthood has an enduring effect on contemporary firm and city policies. Firms governed by “Mao’s mayors” have more stakeholder spending, lower pay inequality, and less internationalization than those governed by Deng’s. Further evidence suggests politicians’ ideology may affect economic activities through channels other than economic policy. Selection bias, endogenous matching and mayor age effect are unlikely to drive our results.

Given Today's New Wave Of Protectionsim, Is Antitrust Law The Last Hope For Preserving A Free Global Economy Or Another Nail In Free Trade's Coffin?, Allison Murray

Loyola of Los Angeles International and Comparative Law Review

No abstract provided.

Does Foreign Direct Investment Lead To Industrial Agglomeration?, Wen-Tai Hsu, Yi Lu, Xuan Luo, Lianming Zhu

Research Collection School Of Economics

This paper studies the effect of foreign direct investment (FDI) on industrial agglomeration. Using the differential effects of FDI deregulation in 2002 in China on different industries, we find that FDI actually affects industrial agglomeration negatively. This result is somewhat counter-intuitive, as the conventional wisdom tends to suggest that FDI attracts domestic firms to cluster for various agglomeration benefits, in particular technology spillovers. To reconcile our empirical findings and the conventional wisdom, we develop a theory of FDI and agglomeration based on two counter-veiling forces. Technology diffusion from FDI attracts domestic firms to cluster, but fiercer competition drives firms away. …

Three Essays On Exchange Rate And Capital Controls, Yaorong Lou

Theses and Dissertations--Economics

This dissertation consists of essays that study exchange rate pass-through, China’s de facto exchange rate regime, and China’s capital controls.

The first essay studies exchange rate pass-through (ERPT) by using a set of data from ten countries including four advanced economies and six Asian emerging markets. The price indices used in this essay include consumer price, producer price, import price and export price indices. While most literature only include the import price index, this essay also puts emphasis on the export price index. It investigates the asymmetry in the ERPT between depreciation and appreciation of domestic currency by using a …

Australian Real Estate Stock Reactions To Firb Regulation Changes, Henry Wei

CMC Senior Theses

This study analyzes the share price reactions to real estate development and building/construction materials corporations in relation to FIRB rule changes. It appears companies as a whole were indifferent to the rule changes; however individual securities returns were wildly different. These findings suggest that the FIRB rule changes had a mixed effect on different corporations possibly based on their exposure to the Australian real estate market.

State Based Financial Liberalization, Robert J. Kulzick

Open Access Dissertations

In the last 40 years, states around the globe have increased the role of markets in their financial systems. Using newly collected information on the educational backgrounds of Central Bankers, I demonstrate that the beliefs of state officials about the proper role of markets in the financial system influence the extent to which state's liberalize their financial systems. By tracing the liberalization experiences in both France and China through secondary sources, I show that bureaucrats within the state suggest reforms that conform to their neoliberal training when political leaders turn to them for solutions to what are perceived as technical …

Shadow Banking And Regulation In China And Other Developing Countries, Steven L. Schwarcz

Faculty Scholarship

The rapid but largely unregulated growth in shadow banking in developing countries such as China can jeopardize financial stability. This article discusses that growth and argues that a regulatory balance is needed to help protect financial stability while preserving shadow banking as an important channel of alternative funding. The article also analyzes how that regulation could be designed.

China's Yuan: Asia's Future Anchor Currency?, Hwee Kwan Chow

Research Collection School Of Economics

The yuan is becoming more widely used in pricing and settling intra-regional trade and investment. Asian currencies' movements are likely to shift more in tandem with the yuan, leading to it becoming one of Asia's lead currencies. Singapore is now the world's second-most- important offshore yuan trading hub after Hong Kong.

On The Effectiveness Of Housing Purchase Restriction Policy In China: A Difference In Difference Approach, Jerry X. Cao, Bihong Huang, Rose Neng Lai

Research Collection Lee Kong Chian School Of Business

The Chinese government imposed the purchase restriction policy to rein in the housing bubble in 2010. Using a two-stage difference-in-difference approach and a comprehensive dataset covering the real estate markets across 70 cities, we find that the policy triggered substantial decline in the property price and transaction volume. Cities having higher reliance on real estate sector for fiscal revenue and economic growth experienced greater decline in housing prices following the policy implementation. However, the policy had no measurable effects on the nationwide construction boom, hinting the ineffectiveness of the policy to correct the housing bubble.

Exchange Rates And Export Structure, Wen-Tai Hsu, Yi Lu, Yingke Zhou

Research Collection School Of Economics

This paper studies whether changes in the exchange rate affect a country’s export structure, using an arguably exogenous sudden appreciation of renminbi on July 21, 2005 as the main source of identification. Employing combined regression discontinuity and difference-in-differences approach, we show that China’s export structure became more similar to that of the developed countries after the currency appreciation. We also find that the majority of the appreciation effect comes from the inter-firm resource reallocation rather than the inter-region or intra-firm resource reallocation.

Examining Ipo Success In The Emerging Growth Enterprise Market Of China, Hai Long, Zhaoyong Zhang

Research outputs 2014 to 2021

Adopting a sample of the initial 243 IPOs from the emerging Growth Enterprise Market of China (GEMC) over the 2009 to 2011 period, this study develops a regression model to investigate the relationships between these factors and suggests that the firm’s net profit and its growth rate substantively determine the IPO volume. In addition, this study adopts probit models to test the influence of the four factors on IPO likelihood, and shows that: 1) fundraising amount, as one of the most significant IPO determinants, is positively associated with IPO probability on the new listing market; 2) the net profit, as …

The Rise Of Private Equity In China: A Case Study Of Successful And Failed Foreign Private Equity Investments, June Kim

CMC Senior Theses

China's transition from a planned economy to a market economy has brought about remarkably rapid economic growth. Year after year, China boasted of double-digit growth rates since the early 1990s. Attracted by China's so-called "economic miracle," foreign investors began entering the Chinese market hoping to benefit from the country's vast array of financial opportunities. Private equity, particularly a leveraged buyout, was an unfamiliar concept in China until late 1990s. Now China has become the most attractive destination among emerging markets for private equity investment. Global private equity firms are currently raising billions of dollars for funds focusing on China because …

The Liberalization Of Shibor And The Economic Fundamentals Of House Price Growth In China, Michael J. Mavredakis

CMC Senior Theses

This paper uses data collected from the National Interbank Funding Center of China, the People’s Bank of China, the National Bureau of Statistics, and Bloomberg starting in October 2006 through 2013 to test the economic fundamental’s affecting the housing market in Shanghai, particularly interest rates. This study finds that the 6- month duration Shibor has a negative and significant correlation with house price growth in Shanghai when lagged 4 months. The analysis continues by examining other economic fundamentals affecting house price growth, finding growth in inflation, the money supply and Shanghai real estate investment to have significant, positive relationships with …

Listing Requirements Lose Ipo-Screening Functions: Evidence From The Emerging Growth Enterprise Market Of China, Hai Long, Zhaoyong Zhang

Research outputs 2014 to 2021

Using two multivariate regression models based on prior studies, this paper aims to examine whether the listing requirements of the GEMC are able to help the exchange to screen high quality IPO firms. It suggests that the approved IPO companies have better performances than failed ones, but listing requirements of the GEMC are unable to screen high quality issuers to go public, because the majority of listed companies performed poorly rather than better after their IPOs. This result is against previous findings that regard an IPO market as a screening device.

Is The Renminbi East Asia’S Dominant Reference Currency? A Reconsideration, Hwee Kwan Chow

Research Collection School Of Economics

Recent empirical studies show that the Chinese currency renminbi is either becoming or has become a dominant reference currency in East Asia. This paper reviews the evidence with daily exchange rate data from seven East Asian economies namely, Indonesia, Korea, Malaysia, the Philippines, Singapore, Thailand and Taiwan. We consider the likely problems and pitfalls associated with the application of Frankel-Wei regressions to determine the weights of the US dollar and the renminbi in the implicit currency baskets. We show empirically the estimation of currency weights using non-orthogonalised renminbi movements could suffer from imprecision and/or inconsistency. To circumvent the simultaneity bias …

Challenges Of Rural Microfinance In China - What Can China Learn From Bangladesh And Indonesia?, Shuyang Zhu

Senior Theses and Projects

Given that China has the largest rural population in the world, the demand of finance is very high. On one hand, Agricultural Bank of China (ABC) is moving to serve urban areas, and Rural Credit Cooperatives (RCCs), currently the most important source of formal credit in rural areas, are not doing very promisingly. On the other hand, nongovernmental programs-microfinance institutions (NGO-MFIs) have been performing well in terms of reaching the poor in the remote regions; however, due to the government’s regulations they are only allowed to offer loans but not to take any deposits, thereby limiting their future development and …

China And Brazil: Potential Allies Or Just Brics In The Wall?, Anthony Petros Spanakos

Department of Political Science and Law Faculty Scholarship and Creative Works

Brazil is an increasingly important actor in global governance and for China specifically. Sino-Brazilian relations have deepened considerably but they remain concentrated in areas of trade and investment. There is also considerable overlap in interests between the two countries in other areas, such as diplomatic and political relations. At the same time, China must manage carefully important differences that exist over the enlargement of the UN and the potential challenge to the Brazilian industry.

China’S Exports And The Oil Price, João Ricardo Faria, Andre V. Mollick, Pedro H. Albuquerque, Miguel A. Leon-Ledesma

Economics and Finance Faculty Publications and Presentations

The increase in oil prices in recent years has occurred concurrently with a rapid expansion of Chinese exports in the world markets, despite China being an oil importing country. In this paper we develop a theoretical model that explains the positive correlation between Chinese exports and the oil price. The model shows that Chinese growth can lead to an increase in oil prices that has a stronger impact on its export competitors. This is due to the large labor force surplus of China. We then examine this hypothesis by estimating a reduced form equation for Chinese exports using Rodrik (2006)’s …

Why Economic Performance Has Differed Between Brazil And China? A Comparative Analysis Of Brazilian And Chinese Macroeconomic Policy, Fernando Ferrari-Filho, Anthony Petros Spanakos

Department of Political Science and Law Faculty Scholarship and Creative Works

This paper addresses a specific question: why has China grown so rapidly and Brazil not? To answer this question, it (i) establishes the basis for comparison between China and Brazil by contextualizing these countries within the BRICs concept, and (ii) presents a comparative analysis of Brazilian and Chinese reforms focusing only on the issue of macroeconomic policy, especially the monetary and exchange rate regimes, and its effect on growth.

Why Brazil Has Not Grown: A Comparative Analysis Of Brazilian, Indian, And Chinese Economic Management, Fernando Ferrari, Anthony Petros Spanakos

Department of Political Science and Law Faculty Scholarship and Creative Works

This paper does not aim to dispute that Brazil would benefit from reforms in any or all of these areas. Rather, the paper offers a skeptical perspective on reform menus and proposes an alternative explanation for the faster growth of Brazil’s peers India and China2. The paper begins by introducing (section 1) the idea of the BRICs countries, to establish the basis for comparisons of most similar cases. It then surveys the results of a generation of Washington Consensus era growth (section 2). Although there is a considerable amount of divergence over what causes growth, it seems that something approaching …

An Empirical Examination Of Ipo Underpricing In The Chinese A-Share Market, Ting Yu, Yiu Kuen Tse

Research Collection School Of Economics

Research in the literature shows that initial public offerings (IPOs) of common stocks are systematically priced at a discount to their subsequent initial trading price. The large underpricing magnitude in the Chinese IPO market has attracted much attention. We consider three hypotheses that may explain the IPO underpricing in China. These are the winner's curse hypothesis, the ex ante uncertainty hypothesis and the signaling hypothesis. Among these hypotheses, the winner's curse hypothesis has not been tested in the Chinese market. Using IPO data for online fixed-price offerings from November 1995 to December 1998, our results show that the winner's curse …

An Empirical Examination Of Ipo Underpricing In The Chinese A-Share Market, Ting Yu, Yiu Kuen Tse

Research Collection School Of Economics

Research in the literature shows that initial public offerings (IPOs) of common stocks are systematically priced at a discount to their subsequent initial trading price. The large underpricing magnitude in the Chinese IPO market has attracted much attention. We consider three hypotheses that may explain the IPO underpricing in China. These are the winner's curse hypothesis, the ex ante uncertainty hypothesis and the signaling hypothesis. Among these hypotheses, the winner's curse hypothesis has not been tested in the Chinese market. Using IPO data for online fixed-price offerings from November 1995 to December 1998, our results show that the winner's curse …