Most Popular

The Impact of Corporate Taxes on Firm Innovation: Evidence from the Corporate Tax Collection Reform in China

Jing Cai, Yuyu Chen, Xuan Wang, Dec 19, 2018

We explore a tax reform on manufacturing firms in China in order to study the impact of taxes on firm innovation. The reform switched corporate income tax collection from a local to state tax bureau and reduced the effective tax rate by 10 percent. The reform only applied to firms established after January 2002, allowing us to use a regression...

Can Information Influence the Social Insurance Participation of China’s Rural Migrants?

John Giles, Xin Meng, Sen Xue, Guochang Zhao, Apr 10, 2019

We use a randomized information intervention to shed light on whether poor understanding of social insurance—in terms of both the enrollment process and the associated costs and benefits—drives the relatively low rates of participation in urban health insurance and pension programs among China's rural-urban migrants. Among workers without a contract...

How Do Zombie Firms Affect Innovation? Evidence from China’s Industrial Firms

Yun Dai, Wei Li, Yongqin Wang, May 08, 2019

Zombie firms are insolvent firms that continue to operate due to continued access to financing at extremely low costs. Nie et al. (2016) find that in the year 2013 about 14 percent of Chinese-listed firms and 7.5 percent of Chinese manufacturing firms are defined as zombie firms. The large amount of financing subsidies distributed to insolvent zombie firms...

In Rural China, Gift-Giving Is an Increasingly Costly Competition

Erwin Bulte, Ruixin Wang, Xiaobo Zhang, May 01, 2019

Gift expenditures grow swiftly in rural China and may adversely affect people's welfare. While gift-giving helps to maintain social status and connections, gift competition may create a predicament: people must spend more and more to "keep up with the Joneses." As a result, the escalating gift expenses crowd out spending on other important consumption and become increasingly burdensome to people in rural areas, particularly to the poor.

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.