Since the global financial crisis in 2008, a renovation and reform of financial stability regime is the introduction of Macro-Prudential Management Framework. After reviewing relevant academic literatures and examining the limitations of central bank's traditional objectives and policy instruments, the paper demonstrates the framework that the central bank can use to coordinates the monetary policy and Macro-Prudential regulatory policy. The main conclusions are as follows: First, Macro-prudential regulatory policies, aiming at counter-cyclical regulation and preventing systemic financial risks, can be effectively implemented only if they are supporting by liquidity management. Second, development of financial industry and information technology make the liquidity management face the general equilibrium requirements, so that the central bank should not only care about the inflation target, but also concerned about the flexible financial asset prices system. Third, financial risk determines that the crisis is a probability event, and the financial rescue determines the moral hazard is an inevitable event. In that sense, the financial system stability, financial innovation and zero moral hazard is the new“impossible trinity” in the financial system. Fourth, highly efficient liquidity management is one of the pivotal instruments that can effectively identify systemic financial risk beforehand while preventing SIFIs collapses afterwards. Based on the management of liquidity, the central bank can stabilize the financial asset price system, can effectively manage the macro economy, and achieve the goal of prudent financial management. Fifth, under the influence of financial innovating, real time liquidity payment system will act as financial regulation information provider, taking place of traditional ex post facto statistical system.

This paper presents an endogenous growth model with financial development, innovation and carbon emission, and we explore the impact of financial development on carbon emission intensity. The theoretical model shows that there exists an inverted-U relationship between financial development and carbon emission intensity. The transmission mechanism is that, on the one hand, financial development can enhance technology progress, which reduces carbon emission intensity; on the other hand, financial development increases economic growth rate, which tends to increase carbon emission intensity. There is a tradeoff between these two kinds of strengths. Furthermore, using the data of 30 provinces from 1997 to 2012, we exam the impact of financial development on carbon emission intensity through the panel data model. The empirical results show that there is an inverted-U relationship between the credit level and carbon emission intensity, a U relationship between the FDI level and carbon emission intensity. Financial market development, financial industry competition and the marketization of credit fund allocation have negative effect on carbon emission. The policy implication of this paper is that we should enhance the process of low carbon economy through financial development and innovation.

We construct a Dynamic Stochastic General Equilibrium (DSGE) model to illustrate the transmission mechanism of the central bank policy rate in China based on Ma and Wang (2014). Using a bank-centric financial system to characterize Chinese economy, our model qualitatively demonstrates and quantitatively simulates the transmission of a policy rate change to market rates, and then to the real economy, especially when various administrative restrictions and market frictions are in place. We prove that loan-to-deposit ratio restriction, loan quota, and high deposit reserve requirement ratio may weaken and even distort policy rate transmission. We also extend the dynamic model to estimate the efficiency loss of transmission mechanism due to business cycle factors. A key policy implication of this study is that China should gradually remove various quantitative restrictions and further reduce the deposit reserve requirement ratio, in order to improve the efficiency of interest rate transmission mechanism and facilitate the transition to the new monetary policy framework.

Based on the panel Data of 88 countries from year 1970 to 2012, this paper examines the impact of interest rate liberalization and the explicit deposit insurance on the probability of systemic banking crises. The results shows that, interest rate liberalization tends to increase the likelihood of systemic banking crises; though after the interest rate fully liberalized, bank moral hazard caused by the explicit deposit insurance is high and the explicit deposit insurance’s financial stability effects is not obvious, and for the entire period the explicit deposit insurance’s preventive role of systemic banking crises is limited, the explicit deposit insurance will help to reduce the likelihood of systemic banking crises during the period of interest rate liberalization. In addition, the strengthening of banking supervision, designs intend to improve market discipline and prevent moral hazard, will increase explicit deposit insurance’s financial stability effects and help to prevent systemic banking crises.

Using Redemptory Monetary Capital for Sale of commercial banks from 2006 to 2012, this paper investigates the causes and economic consequences of commercial banks’ engagement in shadow banking. We find that the Big-four state-owned commercial banks, banks with higher ROA, smaller size, higher loan ratio, higher deposit ratio and banks in more financially developed provinces have less Redemptory Monetary Capital for Sale, which indicates that pressure of financial performance and external financial development level are important factors for commercial banks to do the interbank business. Further study shows that the size of Redemptory Monetary Capital for Sale is positively related to the risk of commercial banks. Specifically, Redemptory Monetary Capital for Sale increases the risk of commercial banks through lowering ROA. But the negative effect of Redemptory Monetary Capital for Sale on ROA is not statistically significant when banks have a high Loan-to-Deposit ratio, indicating that one important motivation for commercial banks to engage in shadow banking is to avoid the negative effect of regulation’s restriction on their financial performance.

The paper, using 2010~2013 unlisted SMEs loan data of some large bank as samples, compares the differences between guarantee and collateral in terms of information asymmetry and risk mitigation from the ex-ante and ex-post aspects. We find that compared with those obtaining collateralized loans, enterprises which obtain loans with a third-party guarantee are characterized by high-risk, and they also have a high default risk after controlling for the enterprises’ risk. The findings indicate that third-party guarantee not only fails to ease information asymmetry, but also aggravates the adverse selection and moral hazard. Irrational "bank-guarantor" risk-sharing mechanisms as well as the lack of professionalism of the guarantor are the main causes of this phenomenon. We also find that bank relationship strengthens the banks’ information advantage, and so reduces banks’ use for guarantee.

Economic theory suggests that income inequality predicts housing price and access to housing for low-income families. Using Chinese urban household survey data, this paper empirically examine impacts of income inequality on access to housing for urban low-income families. Empirical results show that, higher income inequality within cities is significantly associated with higher housing cost, smaller per capita living space, and lower housing quality. After controlling own income effect, income inequality is still significantly associated with access to housing among low-income families. Further studies show that the negative impact of income inequality could be moderated by product differentiation in housing market.

Enterprise expectations are considered to be an important factor that affects the macroeconomics. In this paper, the survey data was collected from the MinXin PMI compiled by China Minsheng Bank and China Academy of New Supply-side Economics. The qualitative survey data was transferred into quantitative data and a model was built to examine the formation of enterprise's business expectations and fixed-asset investment expectations. Then we built the expectation errors model to measure the enterprise expectation errors. Our research shows that the enterprise finance, employment and self-evaluation were the key factors of both the formation and errors of enterprise expectations, due to the industry type and enterprise scale, the depth and direction of the influence has a significant difference.

Based on the data of 2010 Chinese Family Panel Studies (CFPS), this paper analyzes the heterogeneous impact of friendship networks and kinship networks on different household credit behavior. The results show that: Social networks have positive effects on the access to household credit and the heterogeneous impact varies with sources of credit. Friendship networks play leading roles in the formal credit, but only affect the possibility of household credit and have no effect on the credit amount. The kinship networks have significant positive effects both on the possibility and the amount of the informal credit. The strength effect is more important than the scale effect for the kinship network. Households that bond with kinship bases on the ancestral temple and genealogy can access to informal credit easier, and the scale of kinship measured by the numbers of relatives visit has insignificant effect. Compared with “ancestral temple” carrier, the “genealogy” carrier has loose connection but covers a broad scope, and plays a more robust role in informal credit.

This paper surveys the effect of guarantee network on firm performance, its transmission channel and institutional causes. Results show that guarantee network has negative effect on firm performance. The transmission channel shows that network induces firms’ excessive investment and opportunistic behavior of the blockholers. When government intervention is higher or market level of financial institution is lower, the effect of guarantee network on firm performance and opportunistic behavior of the blockholers will be larger, and the incentives of bad firms participating in guarantee will be higher. These results indicate that government intervention on firms’ guarantee policy and lower market level of financial institution will lead to forging and abuse of social network when social network is embedded in formal finance, thus suppressing the information function of guarantee. This paper has some implications for both practice of commercial banks and how to seek benefit and avoid disadvantages of social capital.

Existing literature is limited to investigating VAT transformation’s overall impact on corporate investment. While group affiliation is an important factor in investment behavior, there is no research analyzes the different influence of VAT transformation on investment from this perspective. We find that fixed-asset investment scale of group firms is significantly higher than that of independent firms. With the separation of ownership and control increases, it results in greater difference. Dynamics analysis finds that financial constraints is the main factor of both firms’ investment behavior. With the separation of ownership and control increases, agency cost affects investment behavior more, especially on group firms. Besides, over-investment of group firms is significantly higher than that of independent firms during VAT transformation.

Using the data of all publicly listed firms in China from 1999 to 2012, this paper examines whether CEO influence over the board through appointment decisions affects the firm’s likelihood of committing frauds. The results show that CEO’s influence can significantly increase the likelihood of firm committing frauds. These results are robust after addressing potential endogenous problems in CEO’s influence over the board variable. We also find that the positive impacts of CEO’s influence over the board on corporate fraud is weaker when firms are located in the places where people are more likely to trust each other, but stronger when firms are located in the places where people are more risk-taking. Finally, we examine one possible channel through which CEO influence over the board affects corporate fraud – by delaying fraud detection.

Using panel data of Chinese listed firms from 2002 to 2011 and applying the Difference-in-Difference (DID) method, this paper first studies how split-share reform differently affects the state ownership among firms in strategic and non-strategic industries. Furthermore, split-share reform, as an exogenous policy change, justifies the use of Instrument Variable (IV) method, which helps to build the causal relationship between state ownership and firm performance. The empirical result shows that, the decrease in state ownership of firms in the non-strategic industries is significantly larger than their counterpart in strategic industries. More importantly, the decline of state ownership is significantly and positively associated with increased profitability and market valuation. This paper confirms the positive effect of split-share reform on improving corporate governance and firm efficiency, which provides empirical evidence for the assessment of relevant policies.