A Bridge on Economic Issues between China and the World
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Price Discovery and Market Segmentation in China’s Credit Market
Zhe Geng, Jun Pan, Apr 08, 2020The recent unprecedented wave of bond defaults in China has captured the attention of investors worldwide. We document a severe segmentation between the pricing of state-owned enterprise (SOE) and non-SOE bonds that arises sharply post 2018. Using our default measure, we find that this market segmentation is not driven by the fundamentals of the firms. We also show that this market segmentation has also caused...
Data, Collateral, and Implications for the Credit Cycle
Leonardo Gambacorta, Yiping Huang, Zhenhua Li, Han Qiu, Dec 09, 2020The use of massive amounts of data by large technology firms (big techs) to assess firms’ creditworthiness could reduce the need for collateral in credit markets. Using a unique dataset of more than 2 million Chinese firms that received credit from both an important big tech firm (Ant Group) and traditional commercial banks, we find that a greater use of big tech...
The Impact of Rural-Urban Migration on House Prices in China
Carlos Garriga, Aaron Hedlund, Yang Tang, Ping Wang, Jan 27, 2021Rural-urban migration is an integral part of the dynamic process of structural transformation. The interplay between population inflows and house prices depends on various geographical differences in the economic and policy climate. In the case of China, we highlight particularly the roles played by location-specific hukou restrictions and local land supply.
Do Richer Households Exit Agriculture? Positive Income Shocks in Rural China
Jessica Leight, Jul 18, 2018Rural households in China have experienced a steadily increasing rise in their real income over the last twenty years as economic reforms have revitalized this sector. Analyzing an unusual natural experiment generated by an increase in prices paid for mandatory grain procurement in China post-1993, I seek to provide evidence around how an increase in permanent income affects households’ production portfolio. Evidence suggests that households experiencing positive income shocks substitute away from agricultural production and are more likely to migrate and to invest in non-agricultural production. They also increase their observed levels of borrowing and non-staple consumption.
Assessing and Addressing the Coronavirus-Induced Economic Crisis: Evidence from 1.5 Billion Sales Invoice
Zhuo Chen, Pengfei Li, Li Liao, Zhengwei Wang, Aug 31, 2022We probe the effects of the COVID-19 pandemic and the subsequent containment policies on business activities in China by exploiting big data on 1.5 billion sales invoices. The average drop in sales was between 23% and 35%, depending on firm size, for the 12-week period after the Wuhan lockdown.
