China's local government debt stock is immense and still growing rapidly, which brings risks to China's fiscal sustainability and long term economic growth. From the lens of Urban Construction Investment Bonds (UCIB) issued by Local Government Financing Vehicles (LGFVs), this paper studies how the fiscal transfer impacts the issuance of UCIB under the context of China's unitary system. After using instrumental variable, our findings indicate that special fiscal transfer per capita is positively associated with the issuance of UCIB; whereas, non-special fiscal transfer (including tax rebate and general fiscal transfer) has nothing to do with the issuance of UCIB. Geographically, the effect of special fiscal transfer on the issuance of UCIB mainly exists in the inland cities instead of the coastal ones. A further study on these effects finds that there is a sharp rise in the phenomenon of paying off the debt stock by issuing more UCIB.

This paper examines the influence of real effective exchange rate (REER) on house price. Based on the theoretical model, we illustrate the potential channel that REER affects house price, and propose two hypothesis. Using data from 45 countries, we verify that rising REER does increase house price, while the financial openness doesn't affect the impact of REER on house price. Using China's national-level data, we employ Granger causality test based on a VAR model to verify the potential mechanism that REER influences house price. We find that the increase in REER can Granger cause the inflow of hot-money, which promotes the rise of house price. Our results indicate that the increase of the REER of RMB can account for about 13~25% of the rise of house price in China from 2005 to 2014.

In this paper, we construct a two-sector intertemporal framework to analyze the intertemporal and intratemporal substitution effects of real exchange rate and interest rate on the optimal consumption of representative agents. Then the impacts of these effects on the current account are examined empirically. A new method of seasonal data construction is employed and key parameters are estimated based on China's data, which increase the robustness of the empirical research. It is shown that the elasticity of intertemporal substitution (EIS) in China is about 0.16, and that the intertemporal framework with relative prices could explain China's current account dynamics to a great extent . The results indicate that the effects of changes in expected income and relative prices on the optimal consumption choices—particularly the intratemporal substitution effect of real exchange rate—is an important determinant of the co-movement of China's current account surplus and RMB appreciation since 2005.

This paper simulates the impacts of the global financial crisis and responsive policies on the macro economy of China by building financial CGE model and establishing financial SAM. Besides, the corresponding comments and advice are given aiming at the conclusions. According to the results, in all the three simulated situations, global financial crisis does have great impact on the macro economy of China, making enormous downturn in total output, the demand for labor and the household welfare. While in the stimulation of the three policies, large-scale of investment has a significantly effect on company profits increase and GDP growth. Meanwhile the tax deduction policy could largely improve citizen welfare and the adjustment of interest could also promote the recovery of economy but the effects seem to be not quite obvious. When the policies could bring the increase of marginal propensity to consume, the economy tends to recover more quickly. But the risks of inflation and failure to stimulating export do exist when facing the financial crisis, so further adjustments on policies for macro economy remain to be made.

This paper firstly proposes an infinitely recursive model which includes a representative borrower and a representative lender. A special relationship between government and borrower—implicit guarantee is considered to explore the mechanism through which the implicit guarantee of government will impact the default risk and interest rate of bond. Theoretical analysis shows: the impact of implicit guarantee from the government on interest rate depends on regional economic development. If the economy is awful, implicit guarantee won't play an important role in the determination of interest rate since the passive expectation of investors decrease the credibility of implicit guarantee and the existence of any implicit guarantee fail to improve investors' expectation and thus help decreasing financing cost of bond issuers. However, when the economy gets better, implicit guarantee of governments becomes more and more convincing and it can help decrease the interest rate. Based on the theoretical analysis, this paper uses the data of Chinese urban investment bonds during 2006~2011 to test our model. The empirical analysis of this paper coincides with the theoretical predictions.

To coping with the financial crisis, countries around the world have used various forms of quantitative easing monetary policies, nowdays the effect of these monetary policies is diminishing while the side effect cannot be neglected. As a result, market appeals to the monetary authority to launch lower cost and more precise policies, targeted monetary policy control came out. This paper builds an utility function of commercial banks considering both agricultural loans and other loans and analyses the transmission mechanisms of monetary policy and behavior of commercial banks with the feature of credit rationing in the market equilibrium,and then conducts a corresponding simulation with Chinese data.It shows that targeted adjustment of reserve-requirement would optimize the economic structure to some degree while may not promote agricultural loans significantly considering the existence of critical value in the utility function.To implement this policy,many other policy measures are required.

Market forces and regulation arbitrage are two explanations for the value effects of bank internationalization in global financial markets. We use event study method to examine these two explanations respectively, based on all bank internationalization events since 2006. The result shows Chinese capital market gives high abnormal returns for capital arbitrage opportunity, but doesn't respond to market forces. The finding remains robust when considering the value effect of creditor protection in target country. This research indicates that how banks choose their target area matters and also helps to understand the motivation of why financial institutions choose internationalization.

The paper builds up econometric model by two-tier stochastic frontier method which could measure the deviation degree of lending rate dominant power and its impact on banks and small and micro enterprise in collateral security loan market. The empirical analysis shows that enterprises meeting the demand of collateral make the actual rate lower than the benchmark price of 9.46%. The paper implies that banks rely on security too much to judge the quality of the enterprise, which are not only conductive to banks to prevent the credit risk of enterprise but also unfavorable to enterprises raise the availability of funds.

In this paper we investigate the impact of internet based finance on SMEs financing based on the Anderson“long tail”theory . In our research, we found that,firstly the financial needs of SMEs are the “long tail”. Secondly the internet technology can better satisfy the “long tail” need of SMEs. Moreover, internet based finance has economies of scale, economies of scope and external economy at the same time. In traditional financing, as credit rationing is often twisted, the supply curve of financing become arm shape. Within the internet based finance, the arm shape curve can be improved, especially for SMEs and financial resources allocation are more rational. Finally, to promote the health growth of internet based finance, some suggested policies are given in this paper.

Export and R&D are natural complementary activities. However, as a result of financial constraints, export and R&D are not feasible simultaneously and likely to become substitutes. With respect to this research topic, this paper utilizes data of listed companies in China from 2009 to 2013 to carry out empirical studies. We follow existing literature to construct a series of indicators of financial constraints. The estimation results from multinomial logit model show that, financial constraints produce negative impact not only on export but also on innovation. More importantly, financial constraints weaken the complementarity between export and innovation and even lead up to a situation that export crowds out innovation. Using alternative measures of financial constraints in the robustness checks, we find the empirical results remain the same.

It is important for China to optimize the model of openness after economics crisis. We assume that firms facing increasing marginal cost have the substitution effect between different markets. Using the Industrial Enterprise Statistics Database from 1998~2007, we decompose the sales volatility in different markets and find the following regularities. Firstly, foreign and domestic markets are negatively related due to the increasing marginal cost. Secondly, the volatility of export sales increase with export share, while the volatility of domestic sales decrease with export share. The total volatility falls at first and then rises as export share increases. Third, firms engaged in processing trade or with higher inventory accumulation have a stronger substitution effect between different markets.

This paper examines IPO firms' media tone during a particular time window in the IPO process as a proxy for investor sentiment at firm level, and analyzes how investor sentiment affects IPO underpricing. Consistent with existing literatures, negative media tone tends to have more robust explanation for IPO performance. In particular, we find that negative media tone is negatively and significantly related to IPO underpricing, over_funding ratio and underwriters' proceeds_ratio: negative media tone increases by 1%, underpricing decreases by 0.22%, over-funding ratio drops by 0.13%, and underwriting proceeds_ratio drops by 1.44% on average. We further show IPO firms and underwriters have strong incentives to promote IPO firms, which constitutes a driving factor of investor sentiment. We finally test the robustness of media tone as a proxy for investor sentiment.

This paper investigates how the management of media public relation by issuers affects its security pricing. We find that issuer can increase the number of news about itself by spending more money on the management of media public relation. Moreover, this news which aims mainly at marketing the issuing security as advertisement is able to attract more attention of investors and mislead them to be more optimistic about the security value. The more attention, the more investors who will participate in the security subscription, and the more demand for the security, which results to a more positive adjustment of issuing price. However, the more attention of investors before pricing the security will leads to much worse long-term performance of the security when its trading price reverses to the true value in the long run. Our findings imply that there is a conflict between the promotion function of news media and its role as one outside corporate governor.