Rise of Bank Competition: Evidence from Banking Deregulation in China Haoyu Gao, Hong Ru, Robert Townsend, Xiaoguang Yang, Aug 17, 2019
Rise of Bank Competition: Evidence from Banking Deregulation in China Haoyu Gao, Hong Ru, Robert Townsend, Xiaoguang Yang, Aug 17, 2019 This paper documents a novel trade-off of banking deregulation in the context of China by using loan-level big data. We find that following a deregulation in the form of geographically lowered bank entry barriers, the potential benefits such as the lower interest rates for borrowers were mitigated adversely by the worsening credit allocation. The soft budget constraint of SOEs, with implicit government guarantees, makes new entrant banks prefer inefficient SOEs to contemporaneously-opaque local private firms.
Underestimated Role of Banks in China’s Bond Market Marlene Amstad, Zhiguo He, Jul 17, 2019 The role of banks in the Chinese bond market, the third largest in the world, is greatly underestimated when proxied only through the share of issuance. For the future growth and deepening of the Chinese bond market it will be important to lower reliance on banks in order for the bond market to play its intended role as a spare tire of the financial system.
The Impact of Rapid Aging and Pension Reform on Savings and the Labor Supply: the Case of China Hui He, Lei Ning, Dongming Zhu, Jun 26, 2019 Individuals can use savings and labor supply to self-insure against uncertainties over their life cycle, such as idiosyncratic income shocks and changes in longevity and pension benefits. Using China as a case study, we investigate, both empirically and quantitatively, the impact of rapid aging and pension reform on savings and the labor supply, and the roles that savings and the labor supply play as self-insurance channels over the life cycle...
BigTech Lending as a New Form of Financial Intermediation Jon Frost, Leonardo Gambacorta, Yi Huang, Hyun Song Shin, Pablo Zbinden, Jun 19, 2019 BigTech firms, i.e. large technology firms whose primary business is digital services, are entering finance. Their entry into finance started with payments. Increasingly, they have expanded beyond payments into the provision of credit, insurance, and toward savings products, either directly or in partnership with incumbent financial institutions...
The Unintended Consequences of Regulation: Evidence from China’s Interbank Market Xian Gu, Lu Yun, Jun 12, 2019 Financial regulation can have unanticipated consequences in the financial system. The evidence from China’s interbank market shows that banks tend to use newly introduced and lightly regulated financial instruments to get around regulation during their search for funds. Banks facing greater competition or higher liquidity shortages have more incentives to engage in such activities. Such interbank activities are closely associated with banks’ proprietary trading, suggesting the potential risk of financial contagion.