A Bridge on Economic Issues between China and the World
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The Unintended Consequences of Regulation: Evidence from China’s Interbank Market
Xian Gu, Lu Yun, Jun 12, 2019Financial 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.
How the Internet Changed Chinese Exports before Ali Baba Came
Ana M. Fernandes, Aaditya Mattoo, Huy Nguyen, Marc Schiffbauer, May 16, 2018The 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.
Currency Carry Trade by Trucks: The Curious Case of China’s Massive Imports from Itself
Xuepeng Liu, Heiwai Tang, Zhi Wang, Shang-Jin Wei, Apr 13, 2022Capital controls are common in many developing countries. With capital controls, the standard financial market transactions needed for currency carry trade are hard to implement. Yet, as long as there is a big difference between domestic and foreign interest rates, the incentive to engage in currency carry trade is present.
The Long-Run Trend of Residential Investment in China
Ding Ding, Weicheng Lian, Oct 09, 2019Residential investment has been a key growth engine for China in the last two decades. Total housing investment grew from about 4 percent of GDP in 1997 to a peak of 15 percent of GDP in 2014, with residential investment accounting for more than two-thirds of it. Our analysis indicates that structural changes in the Chinese economy that led to rebalancing toward consumption...
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...
