Expectation guidance plays an important role in the monetary policy framework.Pessimistic expectations can exacerbate economic fluctuations and financial risks, making macroeconomic regulation and control challenging. Effective tools for guiding market expectations are essential to prevent systemic financial risks, and the entire process of expectation management should consider market feedback mechanisms. Several key questions require further exploration. First, can central bank expectation guidance policies effectively reduce systemic financial risk？ Second, can deviations in the market's interpretation of central bank expectation guidance policies affect financial stability？ Third, what specific mechanisms underlie the impact of deviations in market interpretations on the systemic financial risk of banks？
To answer these questions, this paper constructs a text sentiment index for the period from 2001 to 2021; specifically, based on China's monetary policy reports and corresponding market reports, this paper constructs a market sentiment index that reflects the central bank's expected sentiment. This index serves to assess changes in the effectiveness of central bank expectation guidance policies over time. In addition, systemic risk indicators are derived from the balance sheet data of 420 commercial banks for the period from 2007 to 2020. Empirical tests are conducted to evaluate whether central bank expectation guidance policies reduce systemic risk, with a focus on channels such as bank credit and interbank activities. Potential endogeneity issues are addressed using dynamic panel models, and robustness tests are conducted by varying the measurement indices, text types, selected texts, and factors such as bank ownership, listing status, and macroeconomic fluctuations.
The empirical findings are as follows. First, central bank expectation guidance policies are closely related to the macroeconomic environment. Second, the emotional interpretation of monetary policy reports, the market sentiment index, and the index reflecting the market reception of the central bank's expected sentiment can effectively reduce systemic financial risk, albeit with diminishing returns, particularly during periods of economic policy uncertainty. Third, the central bank's expected sentiment-market reception reduces systemic risk in banks by mitigating the impact on bank credit and interbank activities. Finally, prospective text-based expected sentiment in the monetary policy report has a more pronounced influence on systemic financial risk than the retrospective text.
Based on the above conclusions, the following policy recommendations can be made. First, the central bank should continue to implement expectation guidance policies, as outlined in the monetary policy implementation reports. These policies should play a role in adjusting and fine-tuning the risk asset allocation and other behaviors of financial institutions. Furthermore, an expectation regulation system that is tailored to the characteristics of economic development should be established to reduce systemic risk levels in banks. Second, in the process of expectation management, the central bank must consider the impact of information receivers on policy implementation. This entails fully understanding the formation mechanism and the factors influencing public expectations and market feedback on expectation guidance policies. Timely responses to negative market feedback should be provided to mitigate the negative impact of information distortion. Third, the expectation guidance policy should comprehensively consider its impact on small and medium-sized institutions and unlisted institutions. Supplementary interpretations of relevant policy documents or policy tools may be required to accompany the release of expectation guidance reports, such as monetary policy implementation reports. This will help the market to accurately interpret the central bank's policy intentions and reduce communication costs. Fourth, during periods of macroeconomic fluctuations and increasing extreme risk incidents, the central bank should enhance its management effectiveness. It should utilize its role as a stabilizing force in times of crisis to maintain market confidence and financial stability. This can be achieved by using more positive language to convey a positive mood, thereby boosting market confidence and achieving the desired effect of policy stability. Incorporating these recommendations into the central bank's practices will contribute to improving the anticipation-based regulatory mechanism, strengthening the anticipation-based regulatory system, and safeguarding against systemic risks.

Overcapacity has become a deep problem that seriously puzzles China's sustainable economic growth, and it is also the focus of the current macro adjustment. For a long time, our country government attaches great importance to the management and prevention of overcapacity problem. The report to the 20th National Congress of the Communist Party of China pointed out that “we should adhere to the theme of promoting high-quality development and organically combine the implementation of the strategy of expanding domestic demand with deepening supply-side structural reform”. Improving capacity utilization is the fundamental way out of overcapacity and the key to promoting high-quality development. In 2004, China's Ministry of Labor and Social Security adopted and implemented the Provisions on Minimum Wages, which promoted the minimum wage system to all parts of the country, and the minimum wage level in prefecture-level cities has been greatly increased. This paper takes the implementation of the minimum wage system in 2004 as the background, explores the possible path of improving the capacity utilization rate of China's manufacturing industry, and provides new ideas for effectively governing and resolving the problem of overcapacity in the future. These works have important theoretical value and practical significance.
We investigate the impact of minimum wage hikes on Chinese firm capacity utilization rate (CUR hereafter) and explore the mechanisms based on Chinese firm level data. We have four main findings to report. First, minimum wage hikes significantly raise firm CUR, and such an impact is increasing as the implementation period of the minimum wage system increases. Second, the heterogeneity analysis demonstrates that the CUR effect of minimum wage hikes is increasing with the treatment intensity. In addition, the promoting impact of minimum wage hikes on firm CUR is more pronounced for labor-intensive firms. Third, we explore the mechanisms through which minimum wage hikes affect firm CUR, and find that minimum wage hikes tend to improve production efficiency, enlarge the on-the-job training, improve management efficiency as well as promote firm outward direct investment, all of these factors jointly raise firm CUR. Finally, this paper further investigates the impact of minimum wage hikes on aggregate CUR at the prefecture-industry level, the results show that minimum wage hikes also significantly foster aggregate CUR growth, and the improvement of resource reallocation efficiency plays an important role The further test shows that minimum wage hikes raise resource reallocation efficiency mainly through promoting the exit of the firms with backward production capacity, and consequently fosters aggregate CUR growth. The above conclusions mean that the Chinese government can guide the manufacturing enterprises to increase innovation capability by improving the wage guarantee system and moderately increasing the minimum wage standard, encourage firms to “go globally”, and accelerate the market-oriented reform, so as to promote the transformation and upgrading of enterprises and improve the capacity utilization rate.
Our paper makes the following four contributions. First, from the perspective of research, the existing literature mainly focuses on the impact of the increase in the minimum wage standard on corporate decision-making behaviors such as employment and wages, corporate profitability, corporate innovation, corporate productivity, and corporate export, while few scholars pay attention to whether and how the increase in the minimum wage standard affects the capacity utilization rate of enterprises. This paper systematically evaluates the economic effects of the increase in the minimum wage standard from the perspective of the capacity utilization rate of China's manufacturing industry. Second, in terms of identification methods, this paper not only uses the difference-in-difference (DID) method to identify the causal effect of the increase in the minimum wage standard on the capacity utilization rate of enterprises, but also further strengthens the causal effect identification by constructing instrumental variables, thus obtaining more reliable research conclusions. Third, this paper systematically analyzes and verifies the mechanism of how the increase in the minimum wage standard affects the capacity utilization rate of enterprises from multiple aspects, which is helpful to deepen the understanding of the internal relationship between the increase in the minimum wage standard and the change in the capacity utilization rate of enterprises. Fourthly, in order to more comprehensively evaluate the relationship between the increase in the minimum wage standard and the capacity utilization rate, this paper further studies the impact of the increase in the minimum wage standard on the overall capacity utilization rate at the urban industry level, and finds that the improvement of resource reallocation efficiency plays an important role. This novel finding undoubtedly has important policy implications for effectively governing and resolving the problem of overcapacity in the future.

Climate risk may become an important trigger of systemic financial risk. Therefore, central banks are devoting increasing attention to combating climate risks to maintain macro-financial stability. From a global perspective, theoretical guidance based on in-depth investigations is urgently required to enable regulatory practitioners to incorporate climate risks into the financial regulation framework and improve regulators' ability to address climate transition risks. With the strengthening of climate policies and the promotion of a green economic transition, the following key questions arise: How will the climate transition risks of Chinese banks change？ Can the macro-prudential regulatory framework address climate transition risks？ What innovations are required to enhance the ability of macro-prudential tools to cope with climate transition risks？ An in-depth study to answer these questions is of great practical significance for preventing and resolving major financial risks and ensuring macro-financial stability in China.
Combining theoretical modeling and empirical testing methods, this paper analyses the impact of climate policy on bank risks, the effectiveness of macro-prudential policy in addressing climate transition risks, and new macro-prudential regulatory methods. First, based on the implementation of climate policies in China, we adopt a text data analysis to construct a Chinese climate policy strength index, and conduct empirical analyses based on the micro data of 320 commercial banks for the period from 2007 to 2021 to provide evidence on whether Chinese banks are facing climate transition risks, whether macro-prudential policy can effectively address such risks, and the influencing path of green credit bubbles. Second, we construct a bank risk-taking benchmark model to analyze the mechanism of climate transition risk generation and reveal the mechanism through which macro-prudential policy addresses climate transition risks. Finally, we extend the benchmark theoretical model and use simulation methods to study the effectiveness of increasing the “brown penalty factor” or decreasing the “green support factor” in addressing climate transition risks, and discuss a new macro-prudential regulatory method that dynamically fine-tunes both types of factors simultaneously.
The main conclusions of this paper are as follows. (1) Strong climate policy may significantly increase bank risks and lead banks to bear increasing climate transition risks, with green credit bubbles being an important influencing path. (2) Strengthening macro-prudential policy to reduce banks' climate transition risks not only is difficult but also may amplify climate transition risks by encouraging the formation and collapse of green credit bubbles. (3) The dynamic macro-prudential regulatory method—that is, gradually increasing the “brown penalty factor” and decreasing the “green support factor”—can encourage banks to increase green loans while reducing climate transition risks.
We put forward three policy recommendations for regulatory authorities to address climate risks. (1) Climate policy should be carried out gradually to promote the green economic transition while minimizing the adverse impact of climate transition risks on macro-financial stability. (2) Regulatory authorities should incorporate climate factors into the macro-prudential regulatory framework and improve macro-prudential tools. (3) A dynamic macro-prudential regulatory method that gradually increases the “brown penalty factor” and decreases the “green support factor” simultaneously should be adopted to address climate transition risks.
This paper makes the following academic contributions. (1) We adopt the text data analysis method to construct a Chinese climate policy strength index. We thus examine the important empirical facts that, first, the Chinese banking sector is facing climate transition risks, and second, it is difficult for the existing macro-prudential regulatory framework to address these risks effectively, and identify the influencing path of green credit bubbles. (2) We construct a bank risk-taking model by incorporating climate policy and new macro-prudential tools, reveal the mechanism of climate transition risk generation, and analyze the effectiveness of existing macro-prudential regulation in addressing climate transition risks. (3) We propose a new macro-prudential regulatory method that involves gradually adjusting the “brown penalty factor” and the “green support factor” simultaneously to effectively address climate transition risks, providing important policy references for regulatory authorities to improve the macro-prudential regulatory framework and enhance China's ability to address climate-related risks.

In the context of global warming, the impact of frequent occurrences of extreme weather on the high-quality development of the real economy and the steady operation of the financial market has increasingly intensified. With the orderly construction of a unified national market and the increasingly close interregional circulation of commodities and factors, an in-depth investigation of the economic impact of extreme weather events has become a critical issue for China. This research has reference value for China in terms of assisting it to cope with downward economic pressure, prevent the adverse spatial spillover effects caused by extreme weather risks, enhance its ability to tackle climate change, and accelerate the construction of an interprovincial joint prevention and control mechanism for extreme weather risks under the national unified market.
Although numerous studies examine the specific impacts of climate change-related risks on China's real economy and financial institutions, the literature mainly focuses on the long-term impacts of climate risks, with little research on the short-term effects on business cycle fluctuations. This paper contributes to the literature in three aspects. First, it innovatively combines network topology analysis with extreme weather risks and portrays the network connectedness that characterizes provincial level extreme weather risks in China. Second, it comprehensively explores the impacts of provincial level extreme weather risks on China's macroeconomic fluctuations from the dual perspectives of network connectedness and spatial spillovers, including both aggregate level and provincial level analyses. Third, this paper discusses demand and the financial channels of the effects from the perspectives of both the real economy and the financial system, and conducts regional heterogeneity analyses.
Following the construction of the Actuaries Climate Index developed by actuarial associations in the United States and Canada, we construct a province level and national level extreme weather index (EWI) in China using the Chinese surface climate daily data (V3.0) published by the China Meteorological Data Service Center. Regarding network correlation, this paper estimates a vector autoregressive model based on elastic network technology to measure the degree of network connectedness of the EWI in each province, and analyzes the specific impact of this degree of connectedness on the aggregate level macroeconomic fluctuations. Next, this paper uses the spatial Durbin model to examine the spatial spillover effects between extreme weather risks in each province, with a focus on meso level analysis.
The findings of this paper are as follows: (1) the provincial level network connectedness of the EWI has increased significantly since 2012; (2) the enhancement of the network connectedness of the interprovincial EWI will compress consumption and investment and hence reduce aggregate demand, increase financial stress, and generate a persistent decline of aggregate output; (3) the increase of the EWI in one province will also affect the real economy of other provinces through spatial spillover effects, repressing real economic activities such as consumption and investment in other provinces through the demand channel, as well as leading to a decline in other provinces' bank credit through the financial channel. We find that there is regional heterogeneity in the spatial spillover effects of the EWI. With the weakening of interprovincial market segmentation, the spatial spillover effects of the EWI will be significantly enhanced.
The conclusions of this paper elucidate the need and directions for the development of extreme weather adaptation policies and preventive measures in various regions. First, China should strengthen its prevention of extreme weather risks; increase its monitoring and early warning systems for extreme weather events; avoid continuous negative impacts of extreme weather risks on the real economy; fully consider extreme weather risks in urban planning, construction, and operation; and accelerate the construction of climate change-adaptive cities to enhance the resilience of the urban economic system. Second, China should pay attention to the impact of extreme weather risks on its financial system, guard against the rise of financial risk and financial pressure caused by extreme weather shocks, and actively prevent the “ratchet effect” of extreme weather risk caused by an insufficiency of domestic demand and the volatility of the financial market. Third, China should promote and enable interprovincial and interregional joint actions to deal with extreme weather risks and thus effectively avoid the interregional contagion of extreme weather risks and to enable provinces and regions to jointly curb the adverse spatial spillover effects caused by extreme weather risks on real economic activities.

The banking concentration in China has gradually decreased in recent years. According to the Global Financial Development data released by the World Bank, as of 2021, the banking concentration in China is gradually approaching that in the United States, which is far lower than that in Canada, Japan, South Korea, and the United Kingdom. This indicates that the Chinese banking concentration is already at a relatively low level. However, a low concentration of the banking industry may affect the stability of the financial industry. Compared with developed Western countries, the Chinese banking market remains in a stage of continuous development, and there are substantial differences in the operating statuses of different types of commercial banks. Therefore, to deeply explore the development paths of local banks, this article aims to analyze the impact of local banking concentration on local banks' loan allocations, which could provide a theoretical basis for further improving the effectiveness of regulatory policies, as well as the allocation efficiency of local financial resources.
Using manually collected data from local banks and data from financial license holders published by the National Financial Regulatory Administration, this article studies the effect of the local banking concentration on local banks' loan allocation efficiency. We find that the higher the local banking concentration, the higher the loan interest rates of urban and rural commercial banks, and this impact is more significant in urban and rural commercial banks subject to stronger rather than weaker market forces. Mechanism tests show that local banks increase loan interest rates because when the local banking concentration is high, local banks have loan customers with high risks. Therefore, raising loan interest rates is a manifestation of local banks' reasonable pricing. Further analysis reveals that when the local banking concentration is high, local bank loans can suppress firms' overinvestment because they tend to increase the loan interest rates for high-risk firms to compensate for the high risk. When the local banking concentration is low, local bank loans can better alleviate insufficient investment by firms. These findings indicate that local banks can reasonably price loans based on the characteristics of loan customers and improve loan allocation efficiency in different banking structure environments. Therefore, the development level of local banking cannot be judged solely by the local banking concentration; promoting the establishment of local banks' effective credit management system is a real necessary condition for improving resource allocation efficiency.
The contributions of this article are mainly reflected in the following aspects. Firstly, this article studies the impact of changes in the banking industry on banks' loan allocations from the perspective of banks. Studies mainly explore the impact of the banking industry structure on credit costs from the perspective of firms, but no consistent research conclusions are obtained. This may be due to considerable differences in loan interest rates among different commercial banks. It can better reflect the interest rate differences between small and medium-sized banks and large banks from the perspective of banks. Secondly, this article takes local banks as the research sample and distinguishes the operational efficiency of local banks under different market structures. Most studies find that after the local banking concentration increases, the loan interest rates of large commercial banks with higher market power are higher than before, but no research is conducted on the loan interest rates of small and medium-sized banks in a monopolistic environment. Thirdly, in recent years, small and medium-sized banks have developed rapidly. This article takes urban and rural commercial banks as research samples to strengthen the understanding of the development path of Chinese small and medium-sized banks and provides policy recommendations to prevent systemic banking risks and promote supply-side structural reforms in the financial industry.
The conclusion of this article indicates that the local banking concentration can affect local banks' loan behavior. Overall, local banks can allocate loans in a reasonable manner and improve loan allocation efficiency at different levels of banking concentration. Compared with developed Western countries, the Chinese banking concentration is relatively low, which may trigger financial risks. Therefore, to improve resource allocation efficiency, central regulatory agencies and local governments should not only consider the development status of the local banking industry based on the concentration or competition level of the banking industry but also further guide healthy competition among commercial banks, encourage local banks to serve the local economy, establish an effective credit evaluation management system, and alleviate the adverse effects of credit discrimination and credit rationing on resource allocation efficiency.

As the core element of modern economic development, finance provides support for green transformation and green governance. At present, the main relevant financial products are green credit, green bonds, and carbon account trading. In 2007, the China Banking Regulatory Commission (CBRC) issued the “Guiding Opinions on Credit Granting for Energy Conservation and Emission Reduction” and the “Guidelines of Issuing Green Credit” to standardize heavily polluting enterprises and promote the development of industries related to energy conservation, emission reduction, and environmental protection. In 2012, the CBRC issued the “Green Credit Guidelines” to establish an institutional framework for green finance, guide the rational allocation of bank credit resources, improve the risk-taking of green enterprises, and strengthen the incentive for substantive enterprise innovation. Following the strengthening of green credit regulation, enterprises that do not achieve emission reductions will face rising interest rates, and it will be more difficult for them to obtain loans. The expansion of green credit has promoted the development of China's green financial system, helped enterprises to use financial resources for green governance, and promoted economic transformation and high-quality development.
In contrast to green credit, which concerns banks and pollution-related industries, green bonds can examine the direct impact of green finance at the micro level of enterprises. Issuers of green bonds pay attention to environmental performance and obtain more holdings from long-term investors and green investors than is the case for traditional bonds. The latest research by Chinese scholars finds that the inclusion of green bonds in the qualified collateral policy of the central bank forces brown enterprises to transform into green enterprises, and substantially improves the green innovation of the bond issuers. Green bond issuance has an industry spillover effect, which greatly reduces the bond financing cost of other enterprises in the same industry. Enterprises issue green bonds to obtain market incentives. The improvement of green governance and the alleviation of financing constraints are motivations.
Based on the credit bonds issued by non-financial enterprises from 2010 to 2021, this paper examines the impact of green bonds on the financing cost of enterprises. The results are as follows. First, we find that green bonds substantially reduce corporate financing costs, a result that remains robust after conducting propensity score matching, excluding special industry bonds and the influence of the underwriter rebate ban, and conducting a two-stage least squares analysis based on visible public goods. Second, our results indicate that enterprises' environmental governance and green innovation can considerably improve the market's recognition of green bonds. Finally, this paper reveals the correction effect of government regulation and environmental governance. It examines government regulation from the perspectives of government expenditure and employees, and then analyzes environmental governance from the perspective of environmental entropy and environmental protection inputs. In regions with stronger government supervision abilities and better environmental governance than other regions, green bonds have a stronger role in reducing corporate financing costs. In particular, green bonds help investors to certify the green transformation of heavily polluting enterprises and reduce the financing costs of these enterprises.
In contrast with the literature, this paper attempts to conduct cross-cutting research from three aspects: finance, environmental governance, and government regulation. We make the following three contributions. First, we enrich the research on green finance by conducting our analysis from the perspective of green bonds. It is difficult to conduct research on green credit at the enterprise level because data on bank loans and green labels are required. Conversely, as data on green bonds are publicly disclosed, green bonds can provide samples and details that enable direct observation. Thus, our study provides a research entry point for academia to explore green finance. Second, the conclusion of this paper indicates that green bonds can substantially reduce firms' financing costs. Third, this paper examines the rectifying effect of government regulation at the city level. Government regulation and environmental governance can help strengthen the role of green bonds in reducing financing costs and support the important role of “effective government” in leading green transformation. The government optimizes the allocation of resources and improves public and environmental governance, which helps promote the green transformation of heavily polluting enterprises and enhance market recognition.

Comprehensively implementing the rule of law is an essential requirement and an important guarantee for upholding and developing socialism with Chinese characteristics. The construction of a high-level rule of law not only contributes to the normal operations of micro-enterprises and the healthy development of the macroeconomy but also plays an irreplaceable role in the realization of social fairness and justice, and the achievement of happiness in people's lives. Therefore, in the context of the new era, how to ensure that the rule of law assists in achieving a comprehensive deepening of reforms and high-quality economic and social development is a topic of concern in high-level decision-making, academic research, and social practice.
The judiciary is the last line of defense in maintaining social fairness and justice, and it has become a bridge across which to coordinate static law and dynamic social development. Specific to the impact of judicial activities on micro-enterprise behavior, studies by Chinese and international scholars find that judicial justice has positive impacts on enterprises' innovative activities, irregularities, financing characteristics, and market value. However, studies neglect the important role of the judiciary in the protection of the property rights in which economic entities invest, and specifically do not pay attention to the mixed ownership reform of state-owned enterprises. In fact, state-owned enterprises are highly important as the material and political foundation of socialism with Chinese characteristics. In the new era, these enterprises are faced with the issues of how to become stronger, better, and bigger, and how to achieve economic, political, and social goals. The mixed ownership reform in the new era is expected to solve these problems. Through fair and effective judicial activities, the lawful rights and interests of private investors in property rights can be effectively protected during the specific implementation and subsequent operation of the mixed ownership reform, and thus can have a positive impact on the mixed ownership process.
In this context, this paper uses a sample of Chinese state-owned listed companies to study the impact of the judicial protection of property rights on the mixed ownership reform of state-owned enterprises by constructing a judicial protection index of property rights at the city level. It finds that when mixed ownership reform of state-owned enterprises distinguishes between the ownership structure and high-level governance, the judicial protection of property rights can improve the information quality of state-owned enterprises and reduce the degree of resource transfers. Thereby, it can enhance the degree to which the mixed ownership reform of state-owned enterprises is manifested in terms of increases in the shareholding ratio and the proportion of directors appointed by non-state shareholders. Furthermore, our research indicates that these effects are more obvious after the implementation of the case-filing registration system reform in 2015, the core of which was that “a case must be filed, a lawsuit must be justified, and the parties' right must be protected,” and are particularly prominent in local state-owned enterprises. Finally, judicial protection of property rights can promote the continuous and dynamic optimization of the mixed ownership reform of state-owned enterprises.
This paper makes the following three contributions. First, it measures the degree of judicial protection of property rights at the city level in China for the first time, explores its influence on the mixed ownership reform of state-owned enterprises, and thus expands theoretical research on the economic consequences of judicial protection of property rights. Second, on the basis of clearly establishing the relationship between shareholders, this paper divides the mixed ownership reform of state-owned enterprises into the two dimensions of shareholding structure and high-level governance and then explores the influence of judicial protection of property rights on the mixed ownership reform of state-owned enterprises. In doing so, it enhances academic research on the factors influencing the reform. Third, the conclusion of this paper shows that the legal protection of economic entities' investment property rights can better promote the mixed ownership reform of state-owned enterprises, thus providing strong support for the important theoretical assertions of “Xi Jinping Thought on the Rule of Law.”
This paper puts forward the following suggestions to promote the mixed ownership reform of state-owned enterprises with the construction of the rule of law in the new era. First, national leaders need to better protect the legitimate rights and interests of potential investors and non-state shareholders to further deepen the mixed ownership reform of state-owned enterprises. Second, all regions in China should effectively implement “Xi Jinping Thought on the Rule of Law”; improve the level of judicial protection of property rights, including the investment property rights of economic entities; and ensure that the rule of law promotes reform and the healthy development of the local economy and society.

High-quality human capital is essential for enterprises to produce final products and conduct research and development (R&D) activities. Its knowledge spillover attributes and complementary capital skills can break through the constraints of diminishing marginal returns on material capital, promote technological progress and labor productivity, and ultimately become the driving force of a country's economic growth. Human capital investment is often time-consuming and involves high risks in actual production activities. Enterprises need to pay competitive salaries to attract and retain high-quality employees, and must bear high investment and training costs to improve employees' skills and abilities and ultimately form high-quality human capital. Therefore, funding, especially long-term funding support, is needed. However, due to the objective environment of financial repression in China, enterprises are often limited to indirect financing through bank credit channels. Moreover, the requirement that “local governments shall not issue government bonds unless otherwise provided by law and the State Council” under the 1995 Budget Law of the People's Republic of China means that local governments generally rely on financing platform companies, local governments, and local governments to raise capital. In general, with the help of financing platform companies, local government departments and institutions raise debts “in disguise” and obtain a large amount of high-quality bank credit by mortgaging assets such as land and providing guarantees to support public projects and investment in infrastructure construction and similar projects, which have a significant demand for funds and a long recovery cycle. This produces a crowding-out effect on enterprise financing, especially long-term financing, and exacerbates enterprises' difficulties in obtaining financing.
Since 2015 and the implementation of local government debt management system reform, a combination of blocking and easing access to finance has been adopted. On the one hand, the law gives local governments the authority to issue local government bonds and allows them to simultaneously carry out debt replacement in accordance with the requirements of budgetary management to reduce the burden of interest on the outstanding debt. On the other hand, the reform clarifies the responsibilities of the government and enterprises and removes the function of government financing using financing platform companies, while simultaneously requiring that local governments do not provide guarantees. The central government implements the no bailout principle to strengthen the hard budget constraint. As a result, the local government debt situation is one of “opening the front door and blocking the back door,” which is likely to reduce the financing pressure on enterprises relying on bank credit financing.
In view of this context, and based on the objective fact that the local government debt management system reform has gradually been promoted nationwide since 2015, this article constructs a quasi-natural experiment, selects A-share listed companies in Shanghai and Shenzhen for the period from 2012 to 2020 as the research object, and uses the staggered difference-in-difference method to systematically examine the impact of local government debt governance on the upgrading of corporate human capital and the underlying mechanism. The findings show that the reform of the local government debt management system substantially contributes to the upgrading of firms' human capital by increasing the size of their debt, lengthening the maturity of firms' debt financing, and pushing firms to increase their investment in fixed assets and R&D, and that these effects are not symmetric across different industries and firm characteristics. Further analysis confirms that firms' operating efficiency, size, employee wage levels, and patent output also increase significantly. Nevertheless, neither the share of firms' labor income nor the quality of their patents is seriously affected.
This paper enriches the empirical research on the microeconomic effects of the reform of the local government debt management system, providing a feasible explanation for the blocked human capital upgrading channels of Chinese enterprises, as well as a reference for the effective promotion of local government debt governance and the implementation of the innovation-driven development strategy. Future related research worth exploring includes the impact of the local debt management system reform on market behavior and the competitive environment of enterprises, and research on related policies that need to be supported in the transformation and upgrading of different types of regions and at the enterprise level.

As socialism with Chinese characteristics enters a new era, the principal conflict facing Chinese society is between unbalanced and inadequate development and people's ever-growing desire for a better life. The Fourteenth Five-Year Plan explicitly states the need to “increase the proportion of labor compensation in initial distribution, improve the wage system, and establish a sound mechanism for reasonable wage growth,” which means that increasing the share of labor income has become an important policy direction for China to optimize the pattern of income distribution and ease social conflict. In this context, exploring the determinants of the labor income share and the mechanism driving an increase in the proportion of labor remuneration in the income distribution system has great theoretical significance and policy value. It is well known that the labor income share measures the proportion of labor remuneration to national income, and thus, to a great extent, the labor income share determines the basic income distribution pattern of an economy.
Numerous studies explore the factors influencing the share of labor income. Most focus on macro-economic factors, such as economic and industrial structure changes and transformations, technological progress, economic fluctuations, and globalization. Some studies examine micro-economic factors, such as labor unions, workers' bargaining power, and firm characteristics, including risk-taking behavior and tax burdens. In recent years, the impact of financial markets, such as margin trading and short selling (rong zi rong quan) and the Shanghai-Hong Kong stock exchange connections (hu gang tong), on the labor income share are attracting increasing attention. However, few studies examine the impact of commercial banks—the traditional financial sector—on the distribution of the labor/capital income share.
Based on Chinese data on industrial enterprises for the 1998-2007 period and listed companies for the 2007-2021 period, this paper addresses a gap in the literature by studying a particular aspect of the commercial banking sector, namely the impact of financial geographic accessibility on the labor income share. Using the number of surrounding bank branches to measure financial geographic accessibility, this paper examines the impact of financial geographic accessibility on the labor income share and its mechanisms. The empirical results show that increased financial geographic accessibility raises the labor income share. Reduced financing costs and improvements in the human capital structure are two important channels that transmit the impact of financial geography accessibility to the labor income share. Specifically, an increase in financial geography accessibility reduces firms' financing costs, which encourages firms to increase capital input and hire more skilled laborers, and reduce their employment of unskilled laborers. The increasing share of skilled laborers in employment dominates the labor income share changes. In addition, the impact of financial geographic accessibility on the labor income share shows obvious heterogeneity due to the differences of firm characteristics, industry characteristics, and regional financial development levels.
The main contributions of this paper are as follows. First, we use the spatial distribution data of bank branches around firms to measure financial geographic accessibility. From the perspective of banking sector expansion, this paper represents an important supplement to the research on how financial development affects the labor income share. Second, it expands the mechanisms by which the financial sector influences income distribution from the perspectives of financing costs and human capital structure change. Whereas the literature is limited to analyses of the financial supply side, this paper proposes that the difference in the elasticity of substitution between capital, skilled labor, and unskilled labor affects the respective relative demands for these components and thus forms a key constraint on the relationship between financial accessibility and the labor income share. Thus, this paper provides a new perspective for understanding the relationship between financial development and factor income distribution. Third, based on micro-level empirical evidence, this paper elucidates the U-shaped evolution of the macro-level labor income share. This paper holds that important reasons for this U-shaped trend of the labor income share in China are the improvement of resource allocation efficiency in the financial sector, an advanced human capital structure, and the difference in the elasticity of substitution between capital and “two kinds” (unskilled and skilled) of labor, and the time-varying nature of these differences in the elasticity of substitution.

In China, the low participation of households in the financial market and the concentrated asset allocation hinder social development. Understanding individual investors' investment decisions is of crucial importance in behavioral and household finance, but due to data limitations, the literature examining individual investors' investment decisions at the personal level is scarce. With the arrival of the big data era, with increased access to big data, and recent technological progress, enriched micro-level data is providing a new opportunity to expand research on individual investors. Therefore, we combine both marketing and financial theories and study the impact of leisure consumption on fund investment. Our study applies mood theory in this context and enriches the toolbox of policymakers.
Specifically, this paper reveals the impact of leisure consumption on individual investment decisions. According to the psychological theories of “mood congruence” and “mood retention,” a positive mood affects individuals' expectations of investment returns and risks and thus influences their investment decisions. Based on the theory that “hedonic” consumption affects individual feelings, this paper proposes that the happy mood induced in investors immediately after leisure consumption leads to them having optimistic expectations of investment returns and encourages them to increase their investments in mutual funds.
Our empirical exercise involves a large set of panel data on individuals who bank with one large bank in Asia, and includes detailed records of their consumption in a department store and their fund investments. We examine the impact and mechanisms of leisure consumption on the households' mutual fund investments using this data set. Specifically, we find that the current-week leisure consumption increases the likelihood of next-week fund investment by more than 50% and raises the amount invested by more than 30%. Further analyses reveal that the investment increase primarily involves low-risk assets such as bonds. Heterogeneous effects on gender and wealth levels are also explored.
Based on our findings, we propose the following four policy recommendations. First, integrating consumption with financial scenarios is a new direction for digital financial development. Financial institutions can enhance the effectiveness of their customer acquisitions and provide personalized services by promoting data sharing and collaborative engagement with individual investors. Second, promoting leisure consumption can serve as a policy tool to increase capital market liquidity. By encouraging leisure activity consumption and altering the emotional state of individual investors, an increase in investment behavior can be stimulated. In turn, this provides greater liquidity to the market and reduces systemic risks. However, it should be noted that leisure consumption-induced investments are not superior to general investments, as they only increase investment willingness without improving investment returns. Third, enhancing policies designed to upgrade consumption can contribute to targeted governance. By improving these policies and establishing scenario-based finance, the spillover effects of consumption in financial scenarios on residents' investments can be explored. Fourth, to avoid investment losses, it is crucial to enhance households' awareness of investment risks, especially in the case of small and medium-sized investors with low financial literacy and limited personal wealth. Regulators should protect and educate investors through improving the understanding of their investment logic.
The contributions of this paper are as follows. First, as a new exploration of the integration of consumption with financial scenarios, this paper demonstrates the potential improvement in households' participation in the financial market through this integration. Moreover, we find that engaging in appropriate leisure consumption can lead to an increase in residents' investment in funds. This novel finding expands the understanding of individual investors' behavior and offers valuable insights to the government to enhance residents' participation in the financial market and optimize asset allocation. Second, this paper uncovers the underlying reasons for the aforementioned behavioral pattern: the positive impact of leisure consumption on individual investors' emotions and their optimistic outlook on investment returns. This discovery is in line with the theory of affective congruence and provides empirical support for the influence of emotions on investment within the field of behavioral finance research. Third, we find that the investment growth resulting from leisure consumption predominantly focuses on low-risk funds, validating the significance of the risk level as a boundary condition that regulates the influence of emotions on investment behavior.

The past 30 years have witnessed two waves of overseas cross-listings by Chinese companies. First, from 1993 to 2003, large state-owned companies, most in traditional industries, were cross-listed on the US and Hong Kong (China) stock markets. Second, since 2018, there has been a cross-listing boom of US-listed Chinese companies in Hong Kong, China. The literature largely explains the first round of cross-listings from the perspective of normalizing corporate governance. We argue that the new post-2018 wave of overseas cross-listings has substantially different characteristics from the earlier wave of overseas cross-listings. First, the companies in the first wave were mostly large state-owned companies in traditional industries, whereas the majority of those in the new round of cross-listings are US-listed Chinese companies with private capital based in the new, innovation-oriented economic industries. Second, most of the state-owned companies in the first wave were first cross-listed in the relatively mature US and Hong Kong (China) stock markets, and then cross-listed in the relatively less developed China A-share market, whereas the order of the new round of cross-listings is from the US stock market to the Hong Kong (China) stock market. If the first round of cross-listings can be explained from the perspective of normalizing corporate governance, can we explain the new round of cross-listings in the same way？
This paper links the cross-listing boom of US-listed Chinese companies in Hong Kong, China since 2018 with the key characteristics of most of these US-listed Chinese companies, namely the fact that they are innovation-oriented new economy companies. We focus on these US-listed Chinese companies as our research object for the period from 2018 to 2021 and empirically reveal that the new economy companies have incentives to seek cross-listing because of their preference for diversified financing channels under the guidance of innovation.
The main conclusions and potential research contributions of this paper are summarized in the following four points. First, in contrast to the literature, which mainly examines the motivations for cross-listing behavior from the perspective of normalizing corporate governance, this paper puts forward a new hypothesis that can logically and consistently explain the new round of cross-listings since 2018, namely the hypothesis of companies' preferences for diversified financing channels under the guidance of innovation. We find that the requirement for a certain level of R&D by innovation-oriented companies increases their investment opportunities, thus increasing their future capital needs and making them inclined to cross-list to improve the stability of their equity financing channels. Second, in terms of the mechanism, the literature on the expansion of the equity financing channels of companies emphasizes that this lowers the cost of equity financing and the underpricing rate of stock issuance by reducing the information asymmetry affecting enterprise value, and thus eases companies' access to equity financing. This paper shows that for US-listed Chinese companies, the stock conversion channel accessed by cross-listing on the Hong Kong (China) stock market can largely ensure that the liquidity of the companies' stocks is not affected by a single capital market, thus improving investors' expectations of the stability of the stock liquidity and reducing the difficulties and cost of corporate equity financing. Third, in terms of economic consequences, this paper shows that cross-listing on the Hong Kong (China) stock market can relieve financing constraints and cushion the impact of negative policy events in the US stock market on these US-listed Chinese companies' stock prices. Finally, this paper uses the data of US-listed Chinese companies, most of which are innovative companies and which are homologous with the A-share stock market, to conduct research and provide a logical and empirical basis for the pilot policy of cross-listing innovative red-chip companies that are listed overseas on China's A-share market, which has been conducted by the regulatory authorities of China's A-share market in recent years.
This paper argues that the new economy companies, for which market value is highly dependent on the growth opportunities yielded by innovation, can consider implementing the capital market development strategy of diversified listing places to stabilize their R&D investment. The regulatory authorities of China's A-share market can consider allowing innovative red-chip companies that are cross-listed on the A-share market and an overseas stock market to establish one-way stock conversion channels to exchange overseas stocks for domestic stocks. This would improve investors' expectations of the stability of the company's stock liquidity and help these companies to expand their financing channels and increase their R&D investment. In the future, researchers should further explore the unique corporate governance system and capital market development strategy applicable to new economy companies based on their unique characteristics.