Beyond the Fundamentals: How Media-Driven Narratives Influence Cross-Border Capital Flows

We provide the first empirical evidence on how media-driven narratives influence cross-border institutional investment flows. Applying natural language processing techniques to 1.5 million newspaper articles, we document substantial cross-country variation in sentiment and risk indices constructed from domestic media narratives about China in 15 countries. These narratives significantly affect portfolio flows, even after controlling for macroeconomic and financial fundamentals. This impact is smaller for investors with greater familiarity or private information about China and larger during periods of heightened uncertainty. Political and environmental narratives are as influential as economic narratives. Investors react more sharply to negative narratives than positive ones.

Does Farming Culture Shape Household Financial Decisions?

This article discussing the collectivist culture from traditional rice farming in China leads households to prefer stock market investments and lottery purchases while reducing their need for insurance. This demonstrates the strong influence of cultural heritage on modern financial decisions and highlights the need to consider cultural factors in financial policy making.The collectivist culture from traditional rice farming in China leads households to prefer stock market investments and lottery purchases while reducing their need for insurance. This demonstrates the strong influence of cultural heritage on modern financial decisions and highlights the need to consider cultural factors in financial policy making.The collectivist culture from traditional rice farming in China leads households to prefer stock market investments and lottery purchases while reducing their need for insurance. This demonstrates the strong influence of cultural heritage on modern financial decisions and highlights the need to consider cultural factors in financial policy making.

Cooperative Culture and the Birth of Modern Enterprises in China

Banking and Banking Reforms in China in a Model of Costly State Verification

We present a macro view of China’s financial system, in which a monopolistic banking sector coexists endogenously with bonds and private loans. In equilibrium smaller firms raise finance from private lending, larger firms do so through bank loans, and the largest firms do so by issuing bonds. The model predicts that expanding credit supply increases bank loans but reduces bond finance and private lending, in absolute terms and relative to total credit. In addition, removing the interest rate ceiling on bank lending—a recent reform in China—induces larger loans and higher lending rates, lowering the share of bank loans in total credit. We present empirical evidence to support these predictions.

Bonds of Love: Patriotism and the Rise of Modern Banks

This article discusses that patriotism could be an alternative source of trust in government and financial institutions, particularly during challenging times.