Given the dominant role of the US dollar in the international monetary system, the cross-border spillover effects of U.S. monetary policy cannot be overlooked. When U.S. monetary policy changes, a country that synchronizes its interest rates with those of the US may partially hedge against these spillover effects through interest rate adjustments, thereby reducing the direct impact on cross-border capital flows. Conversely, if the country fails to align its interest rates with the US, it may face greater risks of capital flow volatility. Therefore, an in-depth exploration of the impact of monetary policy divergence on cross-border capital flows, along with adjustments and optimization of financial policies, is crucial for maintaining global financial stability.
As an important channel for cross-border capital flows, cross-border banks play a pivotal role in the global financial system. When changes occur in the global financial environment or the monetary policy of a major country, cross-border banks often act as “amplifiers” and “transmitters” of risks, causing localized issues to quickly escalate into global financial crises. In addition, when cross-border banks transmit external shocks, they not only affect the private sector's financing environment but also impact the official sector's foreign exchange reserve management. This leads to differences in their behavioral patterns: capital flows in the private sector tend to be pro-cyclical, while those in the official sector exhibit counter-cyclicality. Existing research primarily focuses on the relationship between external shocks, such as global financial cycle or natural disasters, and cross-border capital flows between the two sectors, while giving less attention to how counterparty countries' monetary policy changes relative to the US impact these flows.
This paper constructs a small open economy model that covers both the private and official sectors, and analyzes cross-border bank capital flows from the US to 27 counterparty countries over the period of 2005 to 2019, using both theoretical and empirical approaches. First, the results show that when the monetary policies of the counterparty country and the US are unsynchronized, leading to a wider interest rate differential (with higher rates in the counterparty country), cross-border banking capital inflows generally exhibit pro-cyclical characteristics in the private sector, while the official sector shows counter-cyclical behavior. Then, mechanism analysis reveals that a higher interest rate differential increases the private sector's risk appetite and demand for cross-border capital, driving more capital to flow into the private sector. Simultaneously, the official sector's incentive to intervene in foreign exchange weakens, allowing it to accumulate reserves, reducing capital flows to the official sector. Next, in countries with greater exchange rate flexibility, higher sovereign credit ratings, and better institutional quality, the pro-cyclicality of private sector capital flows is more pronounced, as is the counter-cyclicality in the official sector. Finally, by coordinating with fiscal and macro-prudential policies, the counter-cyclical buffering effect of the official sector becomes stronger.
The marginal contribution of this paper is reflected in three aspects. First, it offers a deep analysis of cross-border capital allocation between the official and private sectors in counterparty countries, enriching existing research. While previous studies mainly focus on domestic and cross-border capital flows within counterparty countries, especially in the private sector, less attention has been given to the allocation between the official and private sectors. The underlying reasons for this remain unexplored. This paper identifies foreign exchange intervention in the official sector as a key factor driving capital allocation in that sector. It also finds that willingness to take on risk, measured by credit allocation risk, plays a critical role in shaping capital allocation within the private sector. These findings provide more detailed and valuable empirical evidence on the direction of cross-border bank credit allocation.
Second, this paper adds to the research on how monetary policy asynchrony affects cross-border capital allocation between peripheral and US-dominated central countries. Existing studies often focus on the impact of US monetary policy changes, typically analyzing either monetary easing or tightening. However, they tend to overlook how differences in monetary policy timing between the US and other countries can lead to significant variations in capital allocation across sectors. By exploring the relative shifts in monetary policies between the US and counterparty countries, this paper offers valuable insights that enhance the current literature.
Third, this paper offers policy insights for counterparty countries to manage cross-border capital inflows. It distinguishes the flows between official and private sectors and examines the factors driving these differences, such as exchange rate elasticity, credit ratings, and institutional quality. The paper also analyzes how the official sector can respond to changes in capital flows, driven by divergent monetary policies, through coordinated policy actions. These insights provide important guidance for managing cross-border capital flow risks.

The fine-tuning of monetary policy always influences the trading sentiment of investors in risk assets to some extent. The interaction between trader sentiment and financial market stability has been a focal point in financial research. However, existing studies have not provided a comprehensive understanding of this mechanism.
This paper establishes a heterogeneous agent continuous-time DSGE model that incorporates heterogeneous beliefs to explore how differences in expected forms affect responses to monetary policy. By introducing heterogeneous expectations, a more thorough discussion of risk asset pricing is achieved. Specifically, investors are divided into convergent expectation traders, represented by institutional investors, and extrapolative expectation traders, characterized by algorithmic trading and momentum strategies. The price of risk assets can be expressed as an explicit expression of dividends and expectations. This paper provides an analytical solution for risk asset pricing under the assumption of heterogeneous expectations, enhancing the understanding of how prices are influenced by exogenous processes and trader expectations. The well-defined property of this equation reveals a clear relationship between risk asset prices and various exogenous processes, serving as a foundation for numerical simulations and offering significant references for future empirical asset pricing model designs.
One of the key contributions of this study is the integration of stock market trading behaviors' amplification effects on monetary policy into a classic continuous-time general equilibrium model, facilitating a unified discussion of the excess volatility puzzle and financial stability. Despite the frequent continuous oscillation of risk asset prices and extensive literature examining stock price responses to monetary policy shocks, this paper presents a novel perspective based on heterogeneous beliefs within a general equilibrium framework.
Numerical simulation results indicate that irrational traders who follow trends influence the effects of monetary policy shocks on financial markets. The findings show that accommodative monetary policy directly influences the movements of risk asset prices. When traders expect that monetary easing will continue, they choose to increase their investments in risk assets, resulting in a sustained upward trend in prices. During this process, extrapolative expectation traders recognize this trend, forming expectations of continued price increases and actively reallocating assets, further driving up risk asset prices.
Financial market stability has long been an important research topic in economics and finance. However, the rational behaviors and equilibrium assumptions in traditional theories fail to fully explain actual market operations. Many studies demonstrate the presence of various types of investors in financial markets, particularly focusing on extrapolative expectation traders, whose behavior is primarily driven by emotions and psychological factors, deviating from rational expectations based on fundamentals and market equilibrium. This paper investigates the impact of extrapolative expectation traders on financial stability, exploring their behavioral patterns, market influences, and the potential risks and challenges they pose to financial stability. The results indicate that the pattern of behavior of extrapolative expectation traders significantly affects the stability of financial markets.
This paper not only focuses on the effects of extrapolative expectations on financial markets but also examines their impact on the effects of monetary policy changes. Given the close relationship between monetary policy formulation and financial regulation in China, policymakers need to coordinate closely with regulatory bodies to craft effective policy measures.
Thus, monetary policymakers must monitor the behaviors of different types of expectation traders in the market closely and take appropriate policy actions. For instance, when the market overly relies on extrapolative expectations and forms noticeable price bubbles, policymakers can adopt tighter monetary policies to curb market overheating and prevent instability. Additionally, they can enhance market transparency and efficiency through information disclosure and regulation, reducing distortions caused by information asymmetry and incompleteness.
To maintain financial market stability, it is essential to strengthen both monitoring and management of extrapolative expectation traders' behaviors, improve investors' rational decision-making capabilities and risk management awareness, reinforce information disclosure and regulatory frameworks, and enhance international cooperation to collectively address these impacts, thereby improving market efficiency and stability and promoting sustainable economic development.

As financial regulation tightens, banks face growing capital pressures. This can limit their ability to support the real economy. While capital regulation is crucial for managing risks, it can also lead to credit crunches, increased loan interest rates, reduced corporate credit availability, and even intensified economic cycle fluctuations. In China, commercial banks have been facing the challenges in maintaining adequate capital ratios. To ease these pressures, regulators have relaxed the rules for issuing capital instruments, especially by promoting perpetual bonds in December 2018. On January 25, 2019, Bank of China successfully issued the first bank perpetual bond in the interbank bond market. Since then, perpetual bonds have become a key method for banks to boost their Tier 1 capital, with both the number of issuing banks and the scale of issuance growing rapidly. These bonds offer benefits like low issuance thresholds and high market acceptance; however, their impact on bank liquidity creation is not yet clear. This study examines how perpetual bonds affect bank liquidity creation, assessing the effectiveness of capital instrument innovation policies.
Theoretically, banks create liquidity by financing relatively illiquid assets with relatively liquid liabilities. According to the process of liquidity creation, perpetual bonds can enhance bank liquidity creation from both the asset and liability sides, as well as by improving the efficiency of liquidity creation. On one hand, perpetual bonds can increase the amount of capital and enhance banks' credibility, which is conducive to attracting short-term funds into the banking system and creating liquidity on the liability side. On the other hand, they can improve bank's risk absorption capacity, which helps to provide more long-term funds to the society and create liquidity on the asset side. In addition, perpetual bonds can also minimize idle funds within the banking system, accelerate the transformation of liquid liabilities into illiquid assets, and improve the efficiency of liquidity creation.
Empirically, this study uses data on Chinese commercial banks from 2015 to 2023 to test the impact of perpetual bonds. The results show that issuing perpetual bonds has a positive effect on bank liquidity creation. Various robustness tests confirm the consistency of these findings. The study also finds that the positive impact is more significant for banks with relatively sufficient capital and for non-listed banks. In terms of credit demand, perpetual bonds are more effective in enhancing liquidity creation during periods of high credit demand, but less effective during periods of low credit demand. Further analysis shows that perpetual bonds can improve bank capital buffers and quality, reducing the procyclicality of liquidity creation. They also have a positive impact on credit allocation to the real economy, and are helpful to guide funds back to real economic activities.
This study extends the research on capital regulation policies. While most studies focus on the negative impacts of tighter regulations, this study looks at the positive effects of capital instrument innovation. By analyzing the impact of perpetual bonds on bank liquidity creation, this paper reveals the important role of capital instrument innovation in easing bank capital pressure and enhancing banks' ability to serve the real economy, which provides empirical evidence for the coordinated development of capital regulation policies and capital instrument innovation. Our study also has explicit policy implications. The intensification of capital regulation leads to an increase in banks' capital pressure. Capital instrument innovation offers banks a way to replenish capital, which not only helps alleviate the capital pressure on banks but also enhances the liquidity creation, mitigate the procyclicality of liquidity creation, and optimize banks' credit structure, thereby improving banks' ability to serve the real economy. Regulators should actively promote capital instrument innovation, and while maintaining strict capital regulation, encourage banks to issue perpetual bonds and other capital instruments. Regulators should also refine the complementary policies. For example, simplify issuance procedures and provide tax incentives in the issuance phase, and in the secondary market broaden the application of central bank bill swap tools to increase the liquidity of perpetual bonds.

In the price-based monetary policy framework, the government bond yield curve plays a crucial role in transmitting short-term policy rates to long-term market rates, which is vital for the effectiveness of monetary policy. The smooth transmission of the term structure of government bond yields is of particular importance for the monetary policy transmission mechanism.
This paper first reviews the literature of relevant international and Chinese studies. The phenomenon of poor term transmission, where short-term policy rate changes do not effectively propagate to long-term rates, has been observed in both developed and developing economies. For instance, between 2004 and 2006, the United States experienced the “Greenspan Conundrum”. A similar phenomenon of imperfect term transmission also occurred in China, particularly during the period from 2011 to 2014, when the People's Bank of China raised short-term policy rates, but long-term yields failed to follow suit, leading to what has been referred to as the “Chinese Greenspan Conundrum”. While some studies have attempted to explain this phenomenon by factors such as macroeconomic uncertainty and financial market volatility, there has been a lack of systematic research into its causes.
To address this gap, this paper constructs a macro-financial affine model, which incorporates three latent factors and two macroeconomic factors (inflation and output). The model is estimated using data on short-term and medium-to-long-term (3 months, 1 year, 3 years, 5 years, 7 years, and 8 years) government bond yields from April 2006 to September 2024, along with relevant macroeconomic data. Parameters of the model are estimated using the minimum chi-square estimation method (MCSE), and the fit error sequence is evaluated both within and outside the sample to assess the model's explanatory power. The study finds that while the term transmission of government bond yields is generally smooth in most periods, in certain specific periods, the transmission efficiency of short-term interest rate to long-term interest rate decreases significantly. Through decomposition of the fitting errors, it is shown that the volatility of the term premium, rather than market expectations of short-term rates, plays a significant role in explaining long-term yield fluctuations.
Further empirical analysis explores the causes of poor term transmission, incorporating factors such as macroeconomic uncertainty and financial market volatility. The results indicate that bond market volatility has a significant effect on long-term yields, with higher market risk leading to an increase in long-term rates. Additionally, output uncertainty also influences long-term yields, with greater uncertainty tending to push long-term yields higher. However, while these factors explain part of the transmission disruptions, they do not fully account for the anomalies observed during the periods of poor transmission in 2011-2012 and 2013-2014. This suggests that financial structural factors, in addition to macroeconomic and market volatility factors, play a critical role in explaining these disruptions.
The paper delves into the financial structural factors influencing term transmission of the yield curve through a comprehensive set of financial structure indicators, covering macro, market, and micro levels. At the macro level, leverage ratios and the structure of social financing are found to be key factors. The study shows that higher leverage in the non-financial sector increases bond demand, pushing up long-term yields, while higher leverage in the financial sector tends to lower long-term yields by enhancing credit supply. At the market level, the expansion of the bond market relative to the stock market promotes term transmission, and improving the liquidity of the bond market also helps to enhance the pricing power of the market. At the micro level, issues such as an imbalanced government bond issuance structure and the high proportion of financial bonds and the freezing of high-quality assets by the pledge repo transaction mechanism have been identified as significant causes of poor transmission.
Based on these findings, the paper proposes several policy recommendations: (1) optimizing the issuance structure of government bonds by increasing the issuance of medium-and short-term bonds, and reducing the imbalance in the maturity structure; (2) improving bond market liquidity by reforming the repurchase transaction mechanism and reducing the adverse effects of asset freezing; (3) expanding the size of the bond market and enhancing the role of the direct financing market to further improve market efficiency. Additionally, strengthening financial market regulation, enhancing market transparency and reducing the impact of abnormal market fluctuations on term transmission are essential measures to improve the transmission efficiency.
Future research could extend this study by using a longer time span of data and incorporating more comprehensive financial structure variables. Moreover, drawing on international experiences and examining the applicability of financial market deepening and structural adjustments in other countries will provide valuable insights for promoting China's bond market and term transmission mechanism and improving the efficiency of yield curve maturity transmission. This will not only help optimize China's monetary policy framework but also contribute to reforming the financial system.

In recent years, the elasticity and volatility of the RMB exchange rate have been rising. Although it contributes to the improvement of pricing efficiency and openness for the foreign exchange market, it also introduces broader foreign exchange risks. According to statistics from the Bank for International Settlements, at the end of the third quarter of 2024, China's debt position to cross-border banks reached $\$$962.8 billion. The total amount of foreign currency debt was 401.5 billion US dollars, accounting for about 40% of the total foreign debt, and half of these foreign currency debts were from the banking sector. Financing of Chinese enterprises relies primarily on the banking system, and the banking sector not only plays a key financial intermediation role, but also provides funds to the real economy. Exchange rate risks brought by foreign currency exposure of banks warrant the attention of policy makers.According to the “currency mismatch” theory, depreciation of the domestic currency could cause pressure on banks holding foreign currency liabilities to repay them. In the case where foreign currency assets are difficult to fully hedge, the net worth of banks will shrink. Consequently, their lending capacity declines, and credit supply reduces. It is called the “bank lending channel” of exchange rate transmission. The bank lending channel of the exchange rate has been confirmed in several developed countries. China is stepping in a new stage of promoting the two-way opening of its financial market, with foreign currency liabilities accumulating. However, the foreign exchange derivatives market that manages exchange rate risks remains in development, making it easier to observe changes in bank's net worth caused by foreign currency exposure. Besides, compared to developed countries, bank credit is the main source of financing for Chinese enterprises. Thus, the changes in real investment caused by credit contraction further amplify the impact of foreign exchange risks on banks.Using data from Chinese commercial banks, loans, and enterprises from 2010 to 2019, we examine the currency depreciation following China's 2015 exchange rate policy adjustment to verify the bank lending channel of exchange rate. Our findings indicate that the currency depreciation shock causes a decline in the supply of credit by banks with higher foreign currency exposure, due to the effects of both liability side and asset side after decomposing the net exposure. The supply effect remains robust even after controlling firm's credit demand using loan-level data. Moreover, we show that firms that rely heavily on banks with higher foreign currency debt ratio experience a decline in real investment; that is, the exchange rate fluctuations can transmit to the real economy through bank's foreign currency exposure.The contributions of this paper are as follows. First, our research establishes a detailed dataset of Chinese commercial banks' foreign currency assets and liabilities, which provides more evidence on how foreign currency exposure of the banking system works on emerging markets. Second, while existing literature has explored the relationship between currency crises and banking crises, and found they are often “twin crises”, there are few studies on the relationship between exchange rate depreciation and bank credit during non-crisis periods. This research confirms that exchange rate depreciation could make banks reduce credit supply in normal times. Third, the paper explores the relationship between exchange rate and investment from the perspective of bank credit and explores bank behavior in detail, which is a novel perspective to existing studies.The paper has important policy implications on exchange rate risk management. On the one hand, the banking sector should strengthen the matching of foreign currency assets and liabilities, including the currency type, maturity and interest rate of foreign exchange positions, to avoid repayment risks caused by the imbalance of them. On the other hand, enterprises should consider exchange rate risks from broader sources, that is, not only the direct exchange rate risk from their own foreign currency debts, but also indirect risks from highly exposed banks which provide loans to them.

The development of the green industry has a significant “positive external” effect. Under China's financial system, enterprises rely on indirect financing as their source of capital. Therefore, strengthening credit support for the green industry not only helps promote the scale expansion of the green industry but also accelerate the technological progress of the green industry; increasing use of credit price tools helps guide the flow of resources within the green industry, which in turn affects the competitive structure of the market and the efficiency of resource allocation in the green industry. Throughout the existing studies, although they generally emphasize the importance of bank credit support for the development of green industries, they are less likely to explore the impact of the price-matching characteristics of external credit support on the internal resource allocation efficiency of green industries from a structural perspective. Based on the samples of green enterprises in China's capital market from 2014 to 2020, by measuring the total factor productivity of micro-green enterprises and observing the resource allocation efficiency of green industries with the help of the discrete characteristics of the efficiency distribution of micro-enterprises, and by measuring the credit cost matching characteristics around the coupling relationship between credit cost and micro efficiency, we systematically sort out the impact of credit cost matching on the resource allocation efficiency of green industries in terms of their credit cost matching effect and transmission mechanism.
This paper finds that: (1) the improvement of TFP in China's green industry is accompanied by a decline of resource allocation efficiency, in which the slow progress of inefficient enterprises, difficult in being squeezed out of the market and the continuous influx of inefficient enterprises act as the main obstacles to achieve the effective allocation of resources within the green industry; (2) the improvement of the price matching degree of credit helps promote the improvement of the resource allocation efficiency of the green industry and form obvious synergies with the aggregate type of green credit support; (3) the credit cost matching mainly improves the market competitive environment and industrial structure of green industry through three different transmission paths, such as forcing inefficient enterprises to improve their efficiency, restricting the influx of inefficient enterprises into the market, and guiding the optimization of labor factor inputs.
Compared with existing literature, the marginal contributions of this study lies in the following aspects Firstly, we extract a broader sample of green enterprises in China, and through the multi-dimensional efficiency measurement and comparison on this basis, we show the multi-dimensional efficiency evolution characteristics of China's green industry under the regional spatial perspective more comprehensively. Secondly, based on the cost of credit access and TFP indicators of green enterprises, combined with China's unique administrative system structure and the “performance championship” factor, we constructed the cost matching index of credit support for the green industry by measuring the micro-coupling state of credit cost and enterprise efficiency in a specific region. Thirdly, by screening the actual impact of the price matching characteristics of credit support on the resource allocation efficiency of regional green industry, combined with the aggregate adjustment effect of green credit policy and the micro conduction mechanism under the SCP paradigm, the interactive logic of credit price structural adjustment and the resource allocation efficiency of green industry is interpreted from multiple perspectives, and targeted policy recommendations are provided to strengthen the credit support of green industry.
Comprehensively, this paper also puts forward the following policy recommendations for promoting the high-quality development of China's green industry: Firstly, the support for the development of the green industry should not only focus on the TFP enhancement from the perspective of input-output, but also focus on the improvement of resource allocation efficiency within the green industry.Secondly, it should be committed to constructing a market-based competition mechanism for the survival of the winners and the fittest within the green industry,accelerate the orderly exit of inefficient green enterprises, and at the same time raise the market entry threshold of the green industry, to ultimately create an orderly and effective market competition environment. Thirdly, we should make every effort to build a high-quality green credit service system with a matching structure, incorporate the technical level and production capacity of enterprises into the scope of credit approval by financial institutions, and strengthen the credit support for high-quality green enterprises; at the same time, we should strengthen the supporting combination of aggregate green credit policy and structural credit price tools, focus on the structural matching between the price of credit supply and the efficiency of micro-enterprises, and strive to promote the optimization of the structure of credit supply, to give full play to the guiding role of the credit price tools in improving the efficiency of resource allocation for green industries.

The new development paradigm features dual circulation, in which domestic and foreign markets reinforce each other, with the domestic market as the mainstay. Since joining the World Trade Organization, Chinese enterprises have improved their productivity through high-technology imports. However, in the complex and volatile international environment, such imports also increase the risk of the supply chain. Given the varying importance of different technology types in trade, it is reasonable and necessary to focus on the technical structure of trade rather than just its scale.
Subsidy policies targeted at specific firms can have an important impact on the input decisions of other firms in the same domestic industry, which in turn affects the technical structure of these firms' import trade. However, this phenomenon has received little attention in the existing empirical literature. The primary channels for these externalities are the intermediate input and product markets. Subsidized firms, with additional supports, increase their demand for intermediate inputs, driving up domestic prices (referred to as the demand effect). They can also adopt more diverse competitive strategies at lower costs, increasing market competition for other firms (referred to as the competition effect).
The demand effect motivates firms within the same industry to import to mitigate the impact of rising domestic input prices. This effect mainly manifests as an increase in the prices of low-technology goods. For subsidized firms, expanding low-technology inputs is easier and faster than high-technology counterparts due to higher associated costs. Low-technology goods, being more homogeneous, can transmit price shocks across the nation more easily. Thus, the demand effect primarily encourages other firms to import low-technology goods as substitutes for their current inputs.
The competition effect motivates firms to import high-technology goods to enhance their product competitiveness and alleviate increased competitive pressures. Whether improving existing products or developing new ones, importing high-technology goods offers more learning opportunities than low-technology ones. Therefore, the competition effect primarily promotes the import of high-technology goods.
We use matched data from the Chinese Annual Survey of Industrial Enterprises and the Customs Database to examine the potential relationship between the aforementioned externalities of subsidies and the technical structure of import trade by Chinese firms. This paper shows that when the subsidy intensity in an industry increases, the technical structure of imports shifts towards high technology. The mechanism analysis indicates that both demand and competition effects exist, though the former has a relatively weaker impact. The further analysis reveals a significant increase in the scale of high-technology imports. Although supply chain risks objectively increase, they are partially manageable because firms tend to import goods with domestic exporter guarantees.
Compared to existing literature, the main contributions of this paper are reflected in the following three aspects. First, this paper focuses on the import trade technical structure of enterprises, which is closely related to key issues such as the autonomy and controllability of industrial chains and high-level opening-up. Second, this paper explores the impact of subsidies on the import trade technical structure from the perspective of externalities, providing a supplement to the existing literature. Third, this paper discusses and examines the specific mechanism of industry-wide subsidy externalities on the import trade technical structure.
The findings in this paper have important policy implications. First, the government should comprehensively assess the impact of subsidy policies on other non-beneficiary firms in the same industry, ensuring that policies consider both direct and indirect effects. Second, the government should carefully manage the input price fluctuations caused by the demand effect to minimize adverse impacts on related firms. Third, the government should support enterprise transformation and upgrading to fully leverage the positive effects of the competition effect. Fourth, the government should establish and improve supply chain risk management mechanisms.

As of June 2024, there were 125 million registered individual business households in China, accounting for 66.90% of the total number of business entities. The large-scale individual business households have played an irreplaceable role in economic prosperity, promoting entrepreneurship and innovation, and facilitating the lives of the masses, and their business development is related to the healthy development of the country's economy and society. However, self-employed businessmen have long faced problems such as low initial capital, difficulties in financing and lack of experience in development. Mobile payment based on the development of digital technology can make up for the shortcomings of traditional corporate financial services by improving consumption scenarios, increasing financial accessibility, and mining payment data, reconfiguring the links of corporate production, distribution, and consumption, and bringing new opportunities to the intelligent and digital transformation and high-quality development of small and micro enterprises (SMEs). In this context, an in-depth investigation of the net effect of mobile payment on the business performance of individual entrepreneurs and the potential channel is an important issue worthy of in-depth study.
This paper empirically investigates the impact of mobile payment on the business performance of self-employed business households using a two-way fixed effects model with data from three issues of the China Household Finance Survey in 2017, 2019, and 2021. To mitigate estimation bias due to reverse causation and omitted variable problems. First, this paper assesses the severity of estimation bias due to omitted variables using the Oster two-parameter method. Second, this paper uses the average mobile payment utilization rate of other individual business owners within a cohort with roughly the same characteristics as an instrumental variable for mobile payments for estimation purposes and tests the validity of the instrumental variable estimation after relaxing the instrumental variable exclusivity constraints. Third, this paper mitigates the potential sample self-selection problem using propensity score matching estimation.
This paper finds that mobile payment can improve the business performance of individual business households by 15.04%, and it has a greater impact on the business performance of individual business households with lower innovation ability, during the growth period and in the central and western regions. The mechanism test reveals that mobile payment can reduce transaction costs and increase credit availability, thus improving the business performance of individual business households. Further analysis shows that there is a synergistic effect between mobile payment and the National E-commerce Demonstration City program in improving the business performance of self-employed businesses.
Based on the findings of this paper, the following implications are proposed. First, strengthen the analysis and utilization of payment data. Second, promote the development of the deep integration of mobile payment and e-commerce. Third, strengthen the regulation of mobile payment and improve the digital regulatory system, so as to make every effort to protect the healthy and long-term development of small and micro enterprises (SMEs).
Compared with existing literature, the contribution of this paper is reflected in the following three aspects. First, the research object of this paper focuses on individual business households, examines the impact of mobile payment based on digital technology applications on the business performance of individual business households, and tests whether the use of mobile payment can play an inclusive effect from the three dimensions of innovation capacity, life cycle, and regional differences, which enriches and extends existing research. Second, unlike most existing studies that use the macro-level digital financial development index to examine the impact of digital technology applications on firms, this paper defines digital technology applications at the micro-level and provides insights into the possible mechanisms of mobile payments in affecting the business performance of individual entrepreneurs from the perspectives of transaction costs and credit availability. Thirdly, this paper examines the role of mobile payment in improving the business performance of individual business households from the perspective of e-commerce development, providing direct evidence for the in-depth promotion of e-commerce and mobile payment.

China has long attached great importance to the construction of a sound legal environment in the financial market and the protection of investors' interests. In the bond market, directors, supervisors, and senior executives (collectively referred to as “DSS”) serve as key agents responsible for corporate governance and information disclosure of bond issuers, as well as for ensuring the execution of bond covenants. In order to strengthen the legal liability of directors, supervisors, and senior managers, Article 82 of the new Securities Law, which came into effect on March 1, 2020, added a new provision requiring DSS to sign a commitment in the prospectus for corporate bond issuance. That is, the directors, supervisors, and senior managers of bond issuers must sign and commit on the bond offering prospectus for corporate bond issuance that they will “disclose information in a timely and fair manner, and ensure that the disclosed information is true, accurate, and complete.” Otherwise, they will bear corresponding joint legal liabilities. The significance of this provision is not limited to the signature behavior of directors, supervisors, and senior managers and information disclosure itself. Its more important practical significance lies in the fact that, against the background of the registration-based bond issuance system, by enhancing the deterrence of the rule of law to restrain the behavior of directors, supervisors, and senior managers, the protection of investors can be strengthened, thus promoting the high-quality development of the bond market.
There is a character of multiple regulatory bodies in China's bond market. Corporate bonds and enterprise bonds have differentiated requirements for DSS to sign their commitments. Corporate bonds supervised by the China Securities Regulatory Commission (CSRC) require DSS to sign their commitments, while enterprise bonds supervised by the National Development and Reform Commission (NDRC) do not. Based on this divergence, this paper takes the implementation of the new Securities Law as an exogenous shock, using corporate bonds and enterprise bonds publicly issued in the exchange bond market from 2016 to 2021 as samples, and uses the difference-in-differences (DID) method to study the impact of strengthening the legal responsibility of DSS on bond financing costs. It was found that strengthening the legal responsibility of directors, supervisors, and senior managers can significantly reduce bond financing costs by improving corporate governance and alleviating information asymmetry. This means that strengthening the legal responsibility of DSS is an important guarantee for promoting the development of direct financing.
Based on the research findings of this paper, we propose two policy recommendations. Firstly, efforts should be made to further unify the regulation of the bond market. In the process of building a unified bond market, some beneficial regulatory measures can be uniformly applied to different bonds to reduce bond financing costs. Secondly, further strengthen the legal deterrence and investor protection. In order to establish a sustainably effective bond market accountability system, in addition to strengthening the legal responsibilities of DSS, regulatory authorities can further strengthen the legal responsibilities of major shareholders, underwriters, and credit rating agencies, effectively increase the cost of illegal activities, effectively protect the interests of investors, continuously reduce bond market frictions, and lower bond financing costs. This paper has important policy significance for further promoting unified supervision of the bond market, strengthening investor protection, and promoting high-quality development of the bond market.

Carbon information disclosure, as a form of environmental information disclosure, represents a company's commitment to social responsibility. To encourage companies to voluntarily and sustainably fulfill their social responsibilities, a key approach is achieving a “win-win” situation between social value and capital market returns—where a company's socially responsible behavior is recognized by the capital market. This paper uses President Xi Jinping's announcement of China's “dual carbon” goals on September 22nd, 2020, as a policy shock to explore whether official environmental statements can help unify corporate social value and capital market value.
Compared to existing research, the significance and marginal contributions of this paper are as follows: (1) Although prior studies have explored the market performance of corporate non-financial information disclosure within the ESG framework, no research has examined the marginal impact of official statements on capital market pricing. Specifically, after the announcement of the “dual carbon” goals, does the capital market favor firms that disclose carbon information or take a bearish view of them？ This essentially reflects the synergy between government and market forces in the field of environmental governance. If official statements can enhance the capital market's valuation of carbon-disclosing firms, it indicates that corporate social responsibility and capital market returns can achieve a “win-win” outcome. Furthermore, it shows that when promoting environmental protection and other public-interest initiatives, governments can use clear official statements to guide market development and encourage corporate investment. Conversely, if market feedback is negative, it suggests a divergence between market and policy perspectives, which could hinder companies' willingness to reduce carbon emissions or even lead to negative effects like superficial compliance with policies. These issues require attention at the policy level. (2) While existing literature has explored the economic consequences of carbon information disclosure in the “dual carbon” context, the “dual carbon” goals have largely been treated as a research background. In contrast, this paper takes the goals as a specific policy shock and uses event analysis to thoroughly examine how this event influences capital market perceptions and pricing of carbon information disclosure. (3) This paper comprehensively explores multiple mechanisms, including investor confidence, certainty premiums and attention from analysts and media. These discussions help us understand the mechanisms behind capital market reactions to official statements and how to better achieve the coordination of corporate social value and capital market value.
This paper categorizes companies that disclosed carbon information in their 2019 annual reports as the treatment group and those that did not as the control group. Using a difference-in-differences approach, it compares the relative stock performance of these two groups of companies following the “dual carbon” policy announcement. The results show that, after the announcement of the “dual carbon” goals, the stock prices of companies with prior carbon information disclosure significantly outperformed those of companies without such disclosure. This paper identifies three main mechanisms: First, investor confidence in carbon-disclosing firms was enhanced. Second, firms with prior carbon disclosures, having already exposed potential risks, faced lower future uncertainty, resulting in a certainty premium. This mechanism is primarily reflected in stock price volatility rather than substantive production performance. Third, firms with prior carbon disclosures were more likely to be noticed by market participants, as evidenced by increased media and analyst attention following the announcement of the “dual carbon” goals. Additionally, this paper finds that the capital market's pricing of carbon-disclosing firms is more focused on the quality of the disclosure rather than merely the content of the disclosure.
The conclusions of this paper provide at least the following policy implications: First, administrative controls are not the only option for advancing decarbonization tasks or environmental goals. Instead, high-level official statements can drive the market to spontaneously move toward desirable environmental objectives. Compared to various inefficiencies of administrative measures in resource allocation, official statements not only demonstrate a country's commitment to environmental issues but also promote environmental protection through a less distortionary market-driven approach, offering a low-cost policy option. Second, the ultimate effectiveness of official statements, as revealed by the three mechanisms explored in this paper, depends on government credibility and policy enforcement capabilities. Specifically, the market's favorable view of carbon-disclosing firms following the “dual carbon” goals is fundamentally based on trust in policy implementation and effectiveness. Conversely, if a country's policy outcomes consistently fail to meet expectations, it will significantly weaken the “expectation-guiding” effect of official statements, which is similar to central banks' management of market expectations. Third, as the market returns of corporate social responsibility increases, the incentive for “bad firms” to masquerade as “good firms” also rises in an asymmetric information environment. To avoid a “race to the bottom” where inferior firms drive out superior ones, diligent investigations by official environmental agencies, high-quality third-party environmental assessments, professional judgments by brokerage analysts, and supervision from a broad range of market participants are indispensable.

The basic endowment insurance system is a crucial factor influencing labor mobility. In the 1990s, China established a basic endowment insurance system for enterprise employees, starting at the city (or county) level. Due to historical factors, this system is characterized by fragmentation. Different regions develop their own basic endowment insurance policies based on local conditions, resulting in significant disparities such as in contribution burdens, benefit levels, payment methods, and financial status in different areas. Increasing the level of basic endowment insurance pooling has been a clear objective since the establishment of China's social security system. In recent years, China has gradually accelerated the pace of basic endowment insurance pooling reform, completing provincial pooling reform in 2021 and initiating national pooling reform. Existing literature suggests that basic endowment insurance pooling reform, through institutional unification, will promote labor mobility. However, it often overlooks the fact that such reform can also affect labor mobility by influencing regional disparities in basic endowment insurance contribution rates, wages and basic endowment insurance benefits. Moreover, in practice, two models have been implemented—the adjustment fund system and the unified collection and allocation model—but their impacts on labor mobility have not been adequately explored. In light of the ongoing national pooling reform for basic endowment insurance, examining the impact of increased pooling levels on labor mobility is of significant theoretical and practical importance.
Drawing on existing literature and China’s past reform practices, and considering that intra-provincial mobility dominates domestic migration and is directly affected by provincial pooling reform, this paper examines how the reform influences intra-provincial labor mobility. We explore several key questions: First, does the reform promote or hinder mobility? Are the effects heterogeneous across age cohorts?Second, do different models of pooling reform yield varying effects on labor mobility？ Third, how can we deeper understand the mechanisms through which the mobility？
To this end, the paper constructs an overlapping generations model that incorporates improvements in basic endowment insurance pooling levels and the timing of labor mobility, theoretically exploring the mechanisms through which pooling reform influences labor mobility. Leveraging provincial pooling reform as a quasi-natural experiment, we empirically examine how the reform affects intra-provincial labor mobility using data from the China Migrants Dynamic Survey and a difference-in-differences model.
The main findings are as follows: (1)Provincial pooling reform has enhanced the portability of basic endowment insurance rights, promoting labor mobility. It also led to the convergence of regional contribution rates and a narrowing of interregional wage disparities, but did not result in a significant reduction in overall labor mobility. (2) Compared to the provincial pooling reform based on the adjustment fund system, the complete pooling reform with unified collection and allocation has a greater impact on labor mobility. (3) The effects of provincial pooling reform differ across age groups: the enhanced portability of basic endowment insurance rights has a greater influence on the mobility of older workers, whereas the narrowing of wage disparities has a more substantial effect on the mobility of younger workers.
This paper makes several important contributions. First, the paper theoretically analyzes both the portability of basic endowment insurance rights and the wage disparity mechanisms in the context of basic endowment insurance pooling reform, and reveals that the impact of increased pooling levels on labor mobility depends on the relative strength of these mechanisms. It provides new insights into the comprehensive understanding of how basic endowment insurance pooling reform influences labor mobility. Second, existing literature pays little attention to how pooling reform affects the mobility of workers at different age stages and the mechanisms involved. This paper incorporates the level of basic endowment insurance portability into an overlapping generations model that accounts for the timing of labor mobility, in order to capture the impact of basic endowment insurance rights losses on labor mobility decisions.This contributes to a deeper theoretical understanding of the different effects of pooling reform on the mobility of workers at different stages of their life cycle. Finally, the findings of this study offer valuable insights for improving the institutional design of the national pooling reform and promoting labor mobility. This study suggests that, in advancing the national pooling reform, the government must carefully consider significant regional disparities in economic development, demographic structures and the financial pressures of basic endowment insurance fund payments. In light of these realities, it is essential to adopt a more flexible and adaptable institutional design to better balance equity and efficiency. This approach will not only improve China's basic endowment insurance system but also align regional development interests, enhance the efficiency of labor resource allocation, and thus advance the construction of a unified national market.