A Bridge on Economic Issues between China and the World
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What Do a Billion Observations Say about Distance and Relationship Lending?
Haoyu Gao, Hong Ru, Xiaoguang Yang, Nov 07, 2018Using big data of the locations of bank branches and borrowers in China, we document a non-trivial amount of distant lending. The inter-firm network helps banks collect soft information which facilitates the distant lending. We also use novel data of monthly internal loan rating changes to directly measure soft information and find that banks have better soft information and predict delinquent events more accurately for borrowers connected via the inter-firm network.
What You Import Matters for Productivity Growth: Experience from Chinese Manufacturing Firms
Jiawei Mo, Larry D. Qiu, Hongsong Zhang, Xiaoyu Dong, Dec 22, 2021We find that capital import has a substantially larger productivity effect than intermediates import, by generating significant long-term productivity gains through R&D-capital synergy, R&D-inducing, and direct dynamic productivity effects. Our findings highlight the importance of tariff structure in tariff liberalization: the change in tariff structure explains 18% of the productivity gains following China’s WTO accession.
The Price of Growing Like China: Higher Income Risks and Less Consumption Insurance
Raül Santaeulàlia-Llopis, Yu Zheng, Jun 20, 2018Widening income inequality in China has prompted President Xi Jinping to shift focus and to emphasize the fostering of balanced, high-quality development. But how exactly did income inequality evolve over China’s growth process and what was its impact on consumption and welfare? Using a long panel of income and consumption data from thousands of rural and urban households, we document that the increasing income inequality in China mainly reflects increasing permanent income risk, against which it became harder and harder to insure consumption, over the period of rapid income growth from 1989 to 2009. In other words, as household income grew, so did income fluctuations. These income fluctuations had an increasingly direct impact on consumption. For rural households, the welfare cost from increasing income risk and increasing exposure of consumption to income risk can almost cancel out the welfare gain from accelerated income growth over those twenty years.
Internal Capital Markets in Business Groups and the Propagation of Credit Supply Shocks
Yu Shi, Robert Townsend, Wu Zhu, Sep 25, 2019Using business registry data from China, we show that internal capital markets in business groups can propagate corporate shareholders' credit supply shocks to their subsidiaries. An average of 16.7% local bank credit growth where corporate shareholders are located would increase subsidiaries investment by 1% of their tangible fixed asset value, which accounts for 71% (7%) of the median (average) investment rate among these firms...
Housing Booms and Shirking
Quanlin Gu, Jia He, Wenlan Qian, Oct 03, 2018Our research studies the incentive costs of China’s housing booms . We use the type and actual time stamps of 9.3 million credit card transactions by over 200,000 cardholders to detect non-work-related behavior during work hours. Employees respond to positive house price shocks with an immediate and permanent increase in their propensity to use work hours to attend to personal needs. Our estimate implies an elasticity of shirking propensity with respect to house price of 1.6. The effect is driven by homeowners, especially among owners with higher housing wealth. Further analyses point to negative productivity implications of the increased shirking.
