Academic literature on the topic 'Finance China'

The purpose of this thesis is to analyze in detail the development of real estate finance in China, as well as its implications and its future directions. Since the market oriented reforms in 1978, China has experienced many institutional and economic transitions, among which the considerable change of the structure of housing demand, due mostly to the privatization of state‐owned enterprises. However, it was especially since 1998 that the urban economy of China began to thrive, due to a period of unprecedented economic growth. The growth of real estate market was accompanied by the emergence of real estate finance which is increasingly becoming more important in the overall context of Chinese economy. Real estate finance is a branch of finance which aims at embracing real estate industry in order to adapt to the changes of external environment, both domestic and international. This also applies to real estate finance in China, since its economic structural contradictions due to urbanization plans, domestic and international financial reforms and financial complexity at a global level, have led to the creation of a kind of external environment which necessitates an efficient strategy to be handled.

This dissertation contributes to the finance-growth literature theoretically and empirically. The first chapter investigates whether financial deregulation causes economic growth and whether the effect happens through changes in the allocation of credit across sectors or changes in the savings an investment rate. This chapter uses the province-level financial deregulation experience of China from 1981 to 1998 to study these questions. It addresses issues of endogeneity of the growth channels by instrumenting with a series of financial reform policies. It finds that financial deregulation causes economic growth, and the effect is largely through the reallocation of credit across sectors rather than changes in savings and investment rates. The second chapter studies the 'capital-lord-entrepreneur' problem in an endogenous growth model. There are two representative agents--a household (the capital lord) financing R&D and an entrepreneur-inventor performing R&D. How do the contractual provisions on how households and entrepreneurs share property rights on inventions when asymmetric information exists affect growth? The credit contract giving entrepreneurs a higher share of monopolistic profit from inventions (i.e. entrepreneur's inventive incentive (EII) ) elicits more entrepreneurs' effort, generating a "bigger cake", but it also decreases the share of households, resulting in a "household's dissaving" effect. To ensure bounded growth, entrepreneur's effort increases as her share increases but at a decreasing rate, so the "bigger cake" effect is decreasing. The "household's dissaving" effect is increasing because the one additional share of cake given by households is bigger given effort is increasing. At the beginning, the "bigger cake" effect dominates, but beyond a point, "household's dissaving" effect dominates. Therefore the balanced growth rate is an inverted-U function of EII. Whether agricultural resource abundance is a blessing for industrialization is an issue that generates controversy in the development literature and has not been well addressed in the resource-curse literature. Attempting to address this issue, I examine the effect of long-term yearly average rainfall, average and variance of temperature, and sunshine on quality-adjusted farmland per capita and economic growth in China from 1981 to 1998. I find initial quality-adjusted farmland per capita as instrumented by weather indicators has a significantly negative impact on subsequent growth rate, so farmland abundance is a curse for growth. This negative relationship holds true even after controlling for traditional growth factors, population density (i.e. total land per capita), and time effects. Moreover, the weather indicators affect growth only through the channel of initial quality-adjusted farmland per capita, while initial quality-adjusted farmland per capita lowers growth rates mainly through the channel of total factor productivity.<br>Arts, Faculty of<br>Vancouver School of Economics<br>Graduate

The emerging field of household finance, which studies the welfare benefits of financial markets for households and how effectively households use this market, is of significant importance for both academics and policy makers. However, studies in this new field remain scarce. Using data from a national representative survey that is unique for its combination of abundant household characteristics and heterogeneous individual preferences, attitudes and believes, and for its inclusion of investment behaviour and performances, this thesis pioneers a positive household finance study in developing countries by systematically investigating Chinese householders’ investments in the stock market. Moreover, this is the first study to regard the psychological concept of ‘trait anxiety’ (which refers to a person’s inherent propensity to feel anxious) as negatively associated with stock investment return performance. This thesis comprises three main studies. In the first study, I investigate the reasons households participate in the stock market. I find that the evidence from China is systematically consistent with previous studies, which mainly focus on developed countries. That is, the poor and the less educated are less likely to hold equity in their final portfolios; and variables reflecting cost, constraint, preference and expectation play a statistically significant role in stock market participation. I also investigate the stock market participation problem from the new perspective of job satisfaction. Discontentment with one’s job, especially on job salary motivates stock investment activity. Satisfaction with hours of work and job stability boosts the probability of participation. Individual investment performance plays an increasingly important role in household wealth accumulation and financial well-being. Then in the second study I examine the performance of the households that participate in the stock market. First, the evidence from China on this issue is also consistent with that from developed countries. Investors that are poor, less-educated and facing high information costs underperform significantly. Moreover, two so-called ‘investor mistakes’ also undermine stock investment outcomes in China. Second, I study investor performance form a new angle, preference for information screening with respect to resources, and find that investors who rely on their own analysis when making trading decisions earn more. These investors are usually wealthier, have more financial knowledge and are more likely to be male. My third study further explores determinant of investment performance by identifying a more fundamental, intrinsic and stable heterogeneity that is embedded in human personality, i.e., trait anxiety, which reflects people’s innate propensity to feel anxious. I find that investors who are more prone to anxiety have significantly inferior investment performance in terms of stock market return rate, after controlling for many other relevant factors. This finding is robust across investment periods of both half a year and three years, and across regressions using different proxies for trait anxiety.

This thesis extends the literature by adding new empirical evidence associated with firm’s decisions in fixed investment and capital structure, under the assumption of capital market imperfection. In Chapter 2, we combine a panel of over 95,000 Chinese manufacturing firms of different ownership types over the period 2000-2007 with the Marketization Index for China’s provinces during the same period and investigate whether or not, and how, the cross-regional differences in institutions and financial development can affect the firm level financing constraints. Our main results indicate that institutional and financial development in China can reduce financing constraints significantly for the investments of private firms and partly for foreign firms, while increasing the financing constraints for the investments of state and collective firms. Different from previous studies at aggregate level, we identify a positive relation between finance and growth in the Chinese economy from a micro-perspective. In Chapter 3, we estimate the respective effect of state ownership and share concentration on firms’ leverage adjustment speed towards optimal level by using the Chinese listed firms dataset (1998-2010). We find that the firms with state ownership present lower leverage adjustment speed towards optimal leverage ratio than their privately owned counterparts. A positive relation from share concentration to leverage adjustment speed is also detected. These results suggest that ownership structure can significantly determine a firm’s costs of adjustment as well as incentives to adjust. Our works offer a new channel for people to understand the heterogeneous leverage adjustment behaviours among firms. In Chapter 4, using the Chinese listed firms dataset (1998-2016), we test the casual relation from short debt maturity to firms’ fixed capital expenditure. After controlling the level of leverage, we obtain a significant negative coefficient on short debt maturity in the investment regression model, especially for the sample of firms with worse financial condition. This indicates that rollover risk plays an important role in determining firms’ investment decisions and it is more likely to be triggered at bad time. Overall, our research suggest several policy implications. First, deeper economic decentralization and further financial liberalization are important for reducing the resource misallocation between state and non-state sectors in the Chinese economy. Second, more applicable provisions for minority investor protection are required to be formulated, which are expected to provide more options for ownership reform in publicly listed SOEs. Lastly, alternatives for long-term debt financing, other than bank loans, have to be developed, thereby reducing the systematic rollover risk in the economy.

The rising awareness of sustainable issues and the pressing urgency to solve environmental-related problems (e.g. climate change) over the years has set in the capital market a new global trend: the pursuit of sustainable development represents internationally the ultimate goal of governments, institutions, companies and consumers, all jointly contributing to the transition towards a low-carbon and more inclusive economy. The paper aims at verifying to what extent the incorporation of more sustainable measures can influence Chinese companies’ performance and whether it may have positive impacts on it. Starting from an international overview, the first chapter will concentrate on the challenges that society is currently facing, regarding particularly climate change, the different initiatives launched, and the relative reactions of the main players involved in fostering sustainability. The chapter will further examine finance’s role in sustainable development, the gradual evolution towards it and the obstacles holding back the adoption of sustainable measures, eventually ending with the analysis of stock exchanges involvement and the ESG disclosure requirements included in their listing rules. Moving to a closer perspective, the second chapter will discuss China’s contribution to green policies: the chapter will mainly focus on the impacts that environmental issues exert on the world’s second-largest economy and one of the world’s most polluted country, further concentrating on government intervention and engagement in both international and local initiatives, ending with the examination of the effects of these policies on other actors. The examination will continue with the analysis of the country’s engagement in fostering Green Finance and will particularly discuss the role that the collaboration among mainland China (Shanghai and Shenzhen) and Hong Kong Stock Exchanges have in boosting green finance through the disclosure required to the listed companies. The paper will finally compare the efforts made by Chinese listed companies in the Hong Kong Stock Exchange, to assess to what extent the internalisation of environmental externalities impact companies’ financial performance.

This research evaluates government education and health spending in China and explores the underlying determinants of its spatial pattern. A framework defining local needs at three levels is proposed to analyze whether the expenditure has been reasonably allocated. Results show that both government education and health spending closely respond to local needs at the general level. The illiteracy rate is positively correlated with government education spending while the life expectancy is negatively correlated with government health spending. On the demand and supply sides, while government education spending is more responsive to local demand measured by student number, the needs from the supply side represented by the number of medical personnel appear to be more relevant when governments distribute resources into the health sector. One particular area that needs more effort is the responsiveness to the needs arising from the lack of teaching staff. The student-teaching ratio is now largely ignored when governments make decisions of education outlays. Given that the adequacy of teaching staff is a must to ensure the quality of teaching, governments are thus suggested to put more weights to this aspect in its decision-making process. As for the determinants of government education and health spending, this study takes a close look at three groups of key potential explaining factors identified in the existing literature – economic development, openness and decentralization. The findings pose challenges to the existing mainstream theories developed in the western context. Only per capita gross regional product is found to have significant explanatory power for budgetary expenditure on education and a significant negative relationship is revealed. On the other hand, both economic development and the degree of fiscal dependency are significant in explaining the spatial pattern of government health spending; and their relationships are both non-linear. The fixed-effects panel data regression model predicts that, ceteris paribus, a province with a per capita gross regional product of 20,265 yuan would have the most government health outlays while a province with a fiscal dependency ratio of 63.6% would have the lowest public health expenditure. Provinces with either higher or lower per capita GRP (fiscal dependency ratio) than the threshold value allocate fewer (more) resources into government health outlays. The most important recommendation derived from the findings of this dissertation is that the central government should keep an eye on those provinces that are neither fully financially dependent nor fully financially independent, because their government health spending tends to be particularly inadequate.<br>published_or_final_version<br>China Development Studies<br>Master<br>Master of Arts in China Development Studies