The prevalent implicit guarantees provided by financial intermediaries have been a central feature of shadow banking products in China. Our theoretical investigation shows that providing implicit guarantees can be the second-best arrangement and mitigate capital misallocation.
Exploiting China’s WTO accession as a quasi-natural experiment, this study finds that reduced trade policy uncertainty (TPU) in a major destination market promotes domestic entrepreneurial activities in China
Exploiting individual-level data linking worker performance and stock investment, we show that a 10% increase in stock investment returns is associated with a decrease in the same investor’s work output by 3.8% in the following month.