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How the Internet Changed Chinese Exports before Ali Baba Came

Ana M. Fernandes, Aaditya Mattoo, Huy Nguyen, Marc Schiffbauer, May 16, 2018

The roll-out of the internet in China boosted firms’ exports and overall performance even before the rise of broadband and major e-commerce platforms. This finding is relevant for the many developing countries trying to strike a balance between widening access to basic internet services and deepening it through the creation of broadband networks and connections to major e-commerce platforms.

The Role of Punctuation in the P2P Lending Market

Xiao Chen, Bihong Huang, Dezhu Ye, Apr 04, 2018

Using data from Renrendai, one of the largest P2P lending platforms in China, we investigate how the amount of punctuation used in loan descriptions influences the funding probability, borrowing rate, and default. The empirical evidence shows that the amount of punctuation is negatively associated with the funding probability and borrowing rate. We propose that the usage of punctuation affects the readability of a loan description and reflects borrowers’ self-control and cognitive ability.

Is the Wife A Risk Mitigator? Evidence from Family Firms in China

Yue Pan, Jinli Xiao, Vincent W. Yao, Jian Zhang, Jun 06, 2018

Firm-level decisions are largely made by corporate executives whose preferences and attitudes can be shaped by historical traits and what is happening inside their households. We investigate how the involvement of a founder’s wife through marital ownership influences the family firm’s level of risk-taking and explore the underlying mechanisms.

Industrial Policy in China: Some Intended or Unintended Consequences?

Jing Cai, Ann E. Harrison, May 30, 2018

We explore the consequences of a 2004 tax change in China that reduced the value-added tax (VAT) on equipment investment. While the goal was to encourage technology upgrades, we find little evidence that the reform achieved its intended results. Although firms shifted the composition of investment toward machinery, actual investment rates were unaffected. Firms replaced labor with machinery, leading employment to fall significantly in the treated provinces and sectors. Our results suggest that the primary impact of the policy was to induce labor-saving investment.

Hayek, Local Information, and the Decentralization of Chinese State-owned Enterprises

Lixin Colin Xu, May 23, 2018

Hayek (1945) predicts that where local information is important, the organization of production should be decentralized. This prediction is tested and supported in the context of the decentralization of Chinese state-owned enterprises (SOEs). SOEs are more likely to decentralize with increasing distance from the seat of the oversight government. This likelihood is especially strong when performance heterogeneity is greater and/or transportation costs are higher.