Environmental Externalities, Product Attributes, and Market Power: Implications for Government Subsidies

The article discusses how attribute-based subsidy (ABS) designs lead to higher product quality and more effectively mitigate market power than uniform subsidies, albeit with a modest environmental cost.

Cooperative Culture and the Birth of Modern Enterprises in China

Demand for Retirement Insurance: What Do People Want?

This article discusses the diversity and preference variations in the demand for retirement insurance among urban residents in China, particularly the high demand for health-related insurance such as critical illness (CI) and long-term care (LTC) insurance, and how individual financial circumstances, risk appetites, and bequest motives significantly influence their choice of retirement insurance products.

Let a Small Bank Fail: Implicit Non-guarantee and Financial Contagion

The research findings indicate that after the failure of a small bank, regulatory authorities did not fully bail out all creditors as had been the norm, and this policy shift affected the funding costs and market confidence of banks with lower systemic importance (SU).

Overpricing in Municipal Bond Markets and the Unintended Consequences of Regulatory Measures: Evidence from China

Chinese municipal bonds are considerably overpriced in the primary market, leading regulators to set a lower bound on the issuance yield spread. This paper investigates the underlying reasons for this overpricing and evaluates the effects of implementing restrictions on yield spreads. Our findings indicate that underwriters may inflate prices to receive undisclosed benefits from local governments, such as local treasury cash deposits. We further show that the lower bounds severely impede price discovery in the primary municipal bond market. Even bonds not restricted by the lower limit are priced at the reference spread, exacerbating overpricing of riskier bonds. Local governments exploit these fixed prices by increasing the bond issuance amount and extending bond maturity. Our findings suggest that regulatory interference in pricing can have unintended consequences for pricing efficiency and that attempts to rectify mispricing may result in even more severe mispricing.