A Bridge on Economic Issues between China and the World
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Finance Leases: A Hidden Channel of China’s Shadow Banking System
Jinfan Zhang, Ting Yang, Yanping Shi, Nov 11, 2020We find that banks use their affiliated leasing firms to provide credit to constrained clients in order to circumvent the government’s targeted monetary tightening policy, which offsets the expected decline in traditional bank loans in overcapacity industries and hampers the effectiveness of the monetary policy. Although this regulatory arbitrage may cause systemic risk at the macro level, bank-affiliated leasing firms...
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...
From Fog to Smog: The Value of Pollution Information
Panle Jia Barwick, Shanjun Li, Liguo Lin, Eric Zou, Feb 05, 2020During 2013–2014, China launched a nation-wide real-time air quality monitoring and disclosure program, which was a watershed moment in the history of its environmental regulations. We present the first empirical analysis of this natural experiment by exploiting its staggered introduction across cities. The program substantially expanded public access to pollution information, and in turn, triggered a cascade...
The Impact of Health Insurance on the Wellbeing of Older Chinese
Sisi Yang, Katja Hanewald, Aug 12, 2020Using data from the China Health and Retirement Longitudinal Study (CHARLS) in 2011, 2013 and 2015, we analyze whether the universal health insurance system in China increases the life satisfaction of middle-aged and older adults and to what extent the type of health insurance affects their life satisfaction. We find that the life satisfaction of middle-aged and older adults does not depend on having any health insurance...
Unequal School Enrollment Rights and Increased Inequality: The Case of Shanghai
Muyang Zhang, Jie Chen, Jan 03, 2018In Shanghai, housing entitlements with enrollment access to a good public primary school is associated with a 0.1-0.35 percentage point lower annual rental yield. This rental yield gap is the opportunity cost of securing such housing, which is within the affordability range of most middle-income families in Shanghai. This implies that, should there be no credit constraint for homeownership, children from middle-income families should have a higher likelihood of accessing better public education. We find, however, that the enrollment rights between homeowners and renters, together with the credit constraint to own a home, actually lowers the chance of children from middle-income families of attending better public schools relative to those children from families with high initial wealth. This resulting reduced intergeneration mobility exacerbates the social inequality in China.
