A Bridge on Economic Issues between China and the World
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Debt Management and Strategic Interactions in Top-down Bureaucracy: Evidence from China
Xi Qu, Zhiwei Xu, Jinxiang Yu, Apr 30, 2025The Chinese central government implemented a series of measures to establish a top-to-bottom debt ceiling management system starting in 2015. Under this regulatory framework, public debt issuance for a prefecture city is subject to a ceiling (quota) determined through a hierarchical procedure. Based on a comprehensive dataset, we investigate what factors determine the allocations of debt ceiling to prefectural cities in China after the debt management reform. We find that the distributional outcome of the debt ceilings relies on the bilateral interactions of local and their superior governments. We also estimate the effect of ceiling allocation on the real economy, as well as the potential risk associated with implicit debt accumulation.
Lucky Dragons
Chih Ming Tan, Xiao Wang, Xiaobo Zhang, Feb 21, 2024This article explores the intriguing connection between Chinese zodiac signs and parental investment in children’s development. Particularly, parents invest more in children born under the “lucky” sign of the dragon, potentially impacting their cognitive and noncognitive skills alike.
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.
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.
