Inclusive finance has received more attention globally and grown very fast in the last few years. How does inclusive finance affect economic growth? Will its effect vary with different macroeconomic and social conditions? In this paper we conduct cross-country panel regression to answer these questions. We find from our regression that the share of enterprises whose investment funds come from banks is the only inclusive finance variable that has a significant and robust negative effect on economic growth. Taking into account the different macroeconomic and social conditions of different economies, we found that in a country with higher initial GDP per capita, more years of schooling, higher level of rule of law and a larger share of SMEs, the negative effect of inclusive finance variables on economic growth is significantly higher.

This paper studies the relationship between urbanization and population growth in a dual economy that incorporates the substitution relationship between quantity and quality in fertility choice. Rural labors move to urban area and take the advantage of the externality of human capital accumulation. It contributes the fertility inequality between rural area and urban area, leading to the demographic transition during the course of urbanization. As the urbanization rate increases, the effect of urbanization on the demographic transition decreases. It implies that China’s government should further relax the constraint on the fertility rate and remove the barriers to the urbanization.

Renminbi internationalization has created an active offshore RMB market where the exchange rate frequently diverges from the onshore market. Using threshold cointegration models, we explore dynamic interactions between the offshore and onshore RMB exchange rates. Using the data between Nov. 2010 and Nov. 2015, we find that there are dynamic and nonlinear interactions. The onshore market leads the offshore market when the price difference is moderate. When the difference is above a threshhold level, offshore and onshore exchange market become more segmented. The onshore exchange return exhibits momentum while offshore exchange return shows mean reversion. In this case, capital control policies have strong impacts on the dynamics of the RMB exchange rate.

In this paper, we review development course of the interbank market maker system and its relationship with the bond market liquidity. Then we investigate the influence factors of bid-ask spreads by a full market cycle including a bull market and a bear market, and make a comparative study on market behaviors of different types of market makers and their effects of stabilizing the market under different market trends. We find that the liquidity market-makers provide is insufficient in general, while market makers outperform trial market makers. From the perspective of stabilizing the market by market makers, only big-five banks play a certain role. The reason is that market lacks segmentation and the corresponding incentive measures, which refrain market-maker from earning a profit. Only rankings of market makers(reputation) can bring certain incentive for big state-owned banks. So the more important market makers treat profit, the lower willingness of market making.

Based on the samples of Urban Construction Investment Bonds(UCIBs) issued by Local Government Financing Platforms(LGFPs), this paper studies the responses of credit rating agencies and institutional investors to double guarantees(“nominal guarantee” of the bonds and “implicit guarantee” of the local governments) of UCIBs. It comes out that both guaranteed bonds and an increase in government revenue improve the bonds’ rating grades while have no significant effect on the reduction of credit spreads. These results are from the “issuer pays” business model where debt default cannot be truly addressed by credit rating agencies as there are collusions between credit rating agencies and bond issuers, leaving the institutional investors to rely on their own credit rating system to correct this. Hence, it comes a rise of trust crisis in the credit rating system in China’s bond market, and blocks the further development of China’s bond market.

This paper explores local governments’ invisible guarantee of quasi-municipal bonds. Based on quasi-municipal bonds' data from 2009 to 2014, a series of empirical results are mined. Firstly, there is no significant difference between the non-guarantee quasi-municipal bonds and the third-party guaranteed ones in issuing spread, which means the bond market admits local government’s invisible guarantee behind the non-guarantee quasi-municipal bonds. Secondly, local governments’ finance will affect the quasi-municipal bonds' issuing price by both the ability and willingness to supply guarantee. Thirdly, macro-economy, bonds’ properties, and issuers’ sizes have significant influence on quasi-municipal bonds’ issuing price, but not true for the issuers’ profitability. It suggests that the local government’s financing platforms play the role of the utilities of local government in essence rather than real companies. These results have important meanings for perfecting bonds’ transaction mechanism and developing future municipal bonds.

This paper analyzes the impact of engagement of high-interest entrusted loans and corporate innovation activities from the perspective of myopia. Based on myopia theory, our paper analysis firms' innovation activities changes and the level and composition of profitability changes after engagement of high-interest entrusted loans. The results show companies who have high-interest entrusted loans will have lower the future patent outputs and lower R&D expenditure, lower operating profit and higher non-operating profit. Further analysis show that there is no significant difference in overall profitability between companies with high-interest entrusted loans and who don't. This indicates engagement of high-interest entrusted loans is more likely to be triggered by myopia of managers. This paper also contributes to understandings of firm’s behavior under the background of interest rate liberalization.

With the capital market growing fast and risky returns fluctuating remarkably, research on the function of wealth on risk attitudes has great implications for the study of household portfolio allocations and related policy making. This paper for the first time builds a system of indicators of absolute and relative risk attitudes to analyze the empirical relation between the risk preferences of Chinese households and wealth, using representative survey data. It shows that absolute risk aversion decreases with wealth, while relative risk aversion increases, rejecting typically assumptions of CARA and CRRA in economic modeling. Moreover, we find that controlling background risk will make the effect of wealth on risk attitudes no longer significant, which implies that background risk performs as the intermediate that wealth affects risk attitudes. Changes of wealth make a difference in background risk levels and risk tolerance, as well as asset allocation, which means that policies smoothing economy will contribute to encouraging financial market participation.

In the global trend of commodities financialization, commodity futures are changing to an important asset class. This paper aims to investigating investment properties of Chinese commodity futures, from aspects of risk premium, diversification and risk factors. We find that the risk premium of commodity futures is positive, supporting the normal backwardation theory. Similar to the U.S., Chinese commodity prices are positively correlated with stock prices in the last decade, indicating a weak risk diversification function. Further analyses show that inflation and business cycle comovements are the main channels of this positive correlation. In addition, risk factors, which can forecast risk premiums in the U.S. markets, do not have predictive power in Chinese markets.

In the global trend of commodities financialization, commodity futures are changing to an important asset class. This paper aims to investigating investment properties of Chinese commodity futures, from aspects of risk premium, diversification and risk factors. We find that the risk premium of commodity futures is positive, supporting the normal backwardation theory. Similar to the U.S., Chinese commodity prices are positively correlated with stock prices in the last decade, indicating a weak risk diversification function. Further analyses show that inflation and business cycle comovements are the main channels of this positive correlation. In addition, risk factors, which can forecast risk premiums in the U.S. markets, do not have predictive power in Chinese markets.

Whether the loan descriptions have effects on P2P lending behaviors in different formation mechanisms of interest rate is tested from the perspective of textual analysis, using the transaction data on Prosper between December 2007 and February 2012. The results show, in the auction mode of interest rates, borrowers whose credit ratings are lower are more inclined to provide the loan description; both of fog indexes and lengths of loan descriptions form an inverted U-shaped relation to the loan success rate and have a linear positive correlation with the interest rate. Second, the interest rates form a U-shaped relation to the lengths of loan descriptions and are positively correlated with the fog indexes in the pre-set rates mode. Third, providing the loan description could decrease the interest rate, but fails to increase the success rate, and the impacts of providing the loan description are more obvious for borrowers with a lower credit rating in both mechanisms.

With the aggravation of the stock market volatility, the margin trading and securities lending business of security firm is facing a stringent challenge and the demand of credit risk measurement. As the fundamental of credit risk measurement, the measurement of probability of default is meaningful for the customer access management, risk pricing and credit portfolio management. The paper studies measurement of default of probability for individual client in margin trading and securities lending business firstly by Probit, Logistic and Extreme Value model. The history of margin trading and securities lending business is short, data accumulation and management is not perfect yet. In this situation, the paper included the information of asset-debt structure of credit account, and tested the accuracy by ROC curve and Brier score, which proved that the high precision of all three models, but Extreme Value model has higher adaptability for measuring of margin trading and security lending business than other models.

This paper analyses the effects of heterogeneous management style on corporate investment and financing policies using data from year 1999 to 2013, and studies the influence factors and mechanism of management style. The study shows:(1) Management style plays an important role on corporate investment and financing decisions;(2) The management characteristics such as gender, age, specialty, tenure and corporate location are important factors which influence management style;(3) It is not that managers impose their style and preference on the firms spontaneously, but the firms deliberately choose the suitable management style which can influence corporate decisions. Furthermore, there is a close relationship between corporate governing efficiency and the selection of management style.