Annual Conference

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International Macroeconomics, Money & Banking

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May 2017

Reserve Requirements and Optimal Chinese Stabilization Policy

Chun CHANG, Zheng LIU, Mark M. SPIEGEL, Jingyi ZHANG
China’s central bank frequently adjusts reserve requirements for macroeconomic stabilization. We evaluate the effectiveness of such policy in a two-sector DSGE model. A heavy-industry sector—proxied as state-owned enterprises (SOEs)—is financed through government-guaranteed bank loans subject ...
Keywords: Reserve requirementsChinese monetary policyOff-balance sheet loansFinancial acceleratorReallocation and productivity
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Annual Conference

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International Macroeconomics, Money & Banking

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May 2017

Subnational Debt of China: The Politics-Finance Nexus

Ru HONG, Haoyu GAO, Dragon Yongjun TANG
Using unique proprietary loan-level data, we provide the first comprehensive study on China’s local government debt, which was off-balance sheet. Policy and commercial banks, both of which are state owned, are the main financiers of local governments. We find that notwithstanding their prevalent n...
Keywords: Local Government Debt, China, China Development Bank, Policy Loans, Political Promotion
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Annual Conference

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International Macroeconomics, Money & Banking

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May 2017

The Financing of Local Government in China: Stimulus Loan Wanes and Shadow Banking Waxes

Zhiguo HE, Zhuo CHEN, Chun LIU
The upsurge of shadow banking is typically driven by rising financing demand from certain real sectors. In China, the 4 trillion yuan stimulus package in 2009 was behind the rapid growth of shadow banking after 2012, expediting the development of Chinese corporate bond markets in the poststimulus pe...
Keywords: Local Government Financing Vehicles, Municipal Corporate Bonds, Shadow Banking in China
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Annual Conference

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Economic Transformation of Asia

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May 2017

Cross Country Income Differences and the Distinction between Cognitive and Non-Cognitive Human Capital

Xiang CHONG, Stephen YEAPLE
The quality of a countryís educational infrastructure is a crucial determinantof economic well-being. Therefore, the comparisons of the relative strength andweakness of educational systems across countries are critical for both academic research and policy-making. A common approach measures the com...
Keywords: Human capital, Global Economy, Educational Systems
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Annual Conference

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Accounting

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May 2017

The Role of Big 4 Auditors in the Global Primary Market: Does Audit Quality Matter Most When Investors Are Protected Least?

Charles SHI, Inder KHURANA TRULASKE, Chenkai NI
This study examines the informational effect of audit quality on IPO underpricing in the global primary market. Using a comprehensive sample of 14,029 IPOs from 37 countries over a period of 1995 to 2014, we document that IPOs audited by Big 4 auditors are on average significantly less underpriced t...
Keywords: Audit quality, Big 4 versus non-Big4 auditors, Cost of going public, Information asymmetries, IPO underpricing, Legal institutions
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