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Industry/Policy View How Does Monetary Policy Affect the Asset Management Industry? Evidence from China’s Fund Managers
John Ammer, John Rogers, Gang Wang, Yang Yu, Jul 15, 2020We conduct a novel systematic textual analysis of the discussion in the quarterly reports of China fund managers, from which we infer their near-term expectations for Chinese monetary policy. We show that this aggregate index of manager expectations performs well as a forecast of Chinese monetary policy, that fund managers act on these expectations, and that correctly anticipating shifts in policy improves fund...
The Financing of Local Government in China: Stimulus Loans Wane and Shadow Banking Waxes
Zhuo Chen, Zhiguo He, Chun Liu, Jinyu Liu, Jul 05, 2017The shadow banking activities in China surged in 2012-2013. Prof. Zhuo Chen and Prof. Chun Liu from Tsinghua University, Prof. Zhiguo He from Chicago Booth and Prof. Jinyu Liu from the University of International Business and Economics provide empirical evidence showing that the “barbarian growth” of China’s shadow banking during this period constitute a “hangover effect” from the four trillion RMB stimulus package in 2009.
Forecasting China’s Economic Growth
Patrick Higgins, Tao Zha, Karen Zhong, Jun 20, 2017As the second largest economy, China intrigues heated debates among policymakers and researchers alike on how fast its economy will grow in the future and how truthfully the official data reflect its actual economic growth. Patrick Higgins and Tao Zha from the Atlanta Fed and Karen Zhong from Shanghai Advanced Institute of Finance develop a replicable econometric model to shed light on these issues.
Capital Regulations, Bank Risk-Taking, and Monetary Policy in China
Xiaoming Li, Zheng Liu, Yuchao Peng, Zhiwei Xu, Nov 18, 2020China implemented Basel III in 2013 and tightened bank capital regulations. Empirical evidence shows that the new regulations significantly reduced bank risk-taking following monetary policy easing. To meet the tightened capital requirements, banks respond to a balance-sheet expansion by raising the share of lending to state-owned enterprises (SOEs) that are perceived as low-risk borrowers under government...
Credit Expansion and Allocation Dynamics under Economic Stimulus
Lin William Cong, Jacopo Ponticelli, Sep 13, 2017We study credit allocation across firms and its real effects during China’s economic stimulus plan of 2009-2010 using loan-level data from the 19 largest Chinese banks matched with firm-level data on manufacturing firms. We find that the stimulus-driven credit expansion significantly affected firm borrowing, investment, and employment. The plan disproportionately favored state-owned firms and firms with a lower marginal product of capital, reversing the process of capital reallocation that characterized China’s high growth before 2008.
