The sectoral composition of investment is different from that of consumption in China. We incorporate the investment mechanism into a two-sector general equilibrium model. We calibrate model to the output share and the employment share of non-agricultural sector in China. The counter-factual experiments reveal that the effects of the sectoral composition of investment on structural transformation and labor productivity growth are significant, but the effects of investment rate are moderate. Moreover, the changes in the sectoral composition of investment can be largely attributed to the changes in the relative efficiency of sectoral output in producing investment goods.

Based on China's Annual Industrial Survey, the empirical research shows that the financing constraints faced by efficient enterprises are tighter than those of inefficient enterprises. According to the above empirical results, this paper develops a DSGE model with heterogeneous efficiency firms and financial frictions. Due to financial frictions, efficient firms face tighter financing constraints, resulting in aggregate resource misallocation. The exogenous technology shock and financial shock change the financing constraints of firms, leading to resource reallocation among firms, and amplify economic fluctuations. Numerical simulation confirms the resource reallocation mechanism of financial frictions, and the reduction of financial frictions and financial intermediation costs can alleviate the effect of exogenous shocks on economic fluctuations.

Current researches have been used to measure leverage and debt risk of one country with debt ratio, but the analysis of its applicability and prerequisites is insufficient. The theoretical analysis shows that debt ratio neglects assets related to debt paying ability, which means there are flaws in theoretic basis and it may lead to a fuzzy positioning in policy practice. Thus, the current debt ratio is not a perfect indicator of assessing debt risk. In contrast, asset-liability ratio can make up for these shortcomings. Combining these two indicators, we can better assess debt risk, while the difficulty lies in accurate estimation of assets. Using the conversion relationship between asset-liability, debt and capital output, this paper overcomes the difficulty of estimating leverage. With BIS and PWT data, this paper revalues leverage data of 42 major countries in the world from 1950 to 2015, and preliminarily tests risk-forecasting ability of the new indicator. Besides, combining these two indicators, debt risk of China is reappraised. The results show that the rise of Chinese debt ratio is mainly due to the increase of capital output, rather than the increase of leverage, and the core problem of Chinese debt lies not in leverage ratio, but in the quality of assets and the efficiency of its output. This is essentially different from the phenomenon in Europe and the United States that the rise of debt is mainly from the rise of leverage, thus, there should be different solutions accordingly.

By building an endogenous growth model that includes investment structure and financial development, this paper finds that the increase in the proportion of real estate investment in total fixed asset investment will curb financial efficiency when it is greater than the optimal level. This nengative effect is more pronounced when the exeternality of real estate is weak. Based on the sample of 283 prefecture-level cities over 2003-2013, the empirical results of the fixed effect model, the IV approach and system-GMM support the conclusion of the model. Moreover, the effect of real estate investment on financial efficiency is more pronounced in the western region, the economically underdeveloped areas, and areas with bad real estate sales. Deepening market reform and improving the institutional environment, will help to adjust the investment structure, help to enhance financial efficiency and promote the long-term growth of the real economy.

Rocketing housing prices and the consequent unaffordability of houses have become hot social topics. Against this backdrop, this paper uses the micro-data of urban households in China to systematically study the impact of housing prices on local household wages, the mechanism of impacts as well as its impact on local resource allocation efficiency. The study found that the rising house price significantly increases the average wage of local residents through “cost of living effect” and “leisure substitution effect”. Meanwhile, considered that the rising wages that are not based on labor productivity will worsen the efficiency of resource allocation, the paper further explores the relations among housing price, wage and allocation of resources from the perspective of capital labor ratio and factor price distortion. It found that the wage increase caused by housing price rise indeed leads to excessive capital deepening and industrial upgrading, and thus reduces the efficiency of local resource allocation. This research provides family-level micro empirical evidence for the impact of housing prices on local household wages.

China's public health insurance has reached universal coverage. Current challenge is to keep the sustainability of health insurance system. According to the arrangement, informal employees can voluntarily participate in the Urban Employee Based Medical Insurance (UEBMI), which may raise the adverse selection issue. We take advantage of the institutional features of Chinese system, using the China Family Panel Studies (CFPS) 2012-2014 data, to distinguish adverse selection from moral hazard empirically and find that people who voluntarily participate in UEBMI have higher medical expenditure. The results show that people who voluntarily participate in UEBMI have about 78% more medical expenditure than those who compulsorily participate in UEBMI. Moreover, people who voluntarily participate in UEBMI have about 45% more medical expenses than those who participate in Residents Medical Insurance. The selectable medical insurance will improve the welfare of informal employees. However, it is necessary to reform the health insurance system to avoid the potential risk of deficit of health insurance system.

This paper introduces a collateral disposal method to deal with the nonperforming loans of defaulted mortgages. The default rate is calculated by discounted cash flow, finding that the present value of recovered fund is quite sensitive to the fluctuation of the disposal period. Probabilistic density of disposal duration is measured using the historical disposal records from a state-owned bank. Monte Carlo simulation results imply that the non-extreme recovered loss given defaults of the non-performing loans approximately obey normal distributions. The Markowitz portfolio theory is modified by grouping the loans into matrix and then obtains the proportion of each asset group. Based on the consideration of the profit extraction and application of the broker supply and demand equilibrium analysis method, this paper elaborated the expected LGD of asset pool and bond issuance interest rate determination mechanism. Finally, considering the correlated default into account, the simulations on different correlations indicate that our conclusion is robust.

This paper attempts to quantify the value of intellectual property protection (IPP) in China by incorporating IPP factors in the “knowledge stock” evaluation model developed by Griliches (1981). We construct IPP indicators from dimensions of legislative protection, judicial protection and administrative protection at the provincial level and match with patent stock data of listed companies to conduct empirical analysis. The results show that: 1. the stock market value of each patent is approximately 6.85 million yuan, and the value of Invents is significantly higher than that of utility models and designs; 2. one percent improvement of IPP is associated with 1.28, 0.1 and 0.15 million yuan increase in the value of Invent, utility model and design, respectively; 3. judicial protection is more important than legislative protection in enhancing patent values, but the effect of administrative protection remains unclear; 4. patent values of non-SOEs and high-tech firms are more sensitive to the level of IPP. Our findings remain robust to sample sensitivity tests and 2SLS regressions using education information of directors of provincial Intellectual Property Office as instrument variables.

This paper would discuss the impact of financial development on the location choice of FDI from incomplete contract perspective. We develop a monopolistic competition model based on Antràs and Helpman(2004), suggest a hypothesis, that is, financial development would promote FDI inflows of multinational manufactures, and contract intensity increase would enlarge the positive effect of financial development on FDI inflows. Using data across province and industry of China, we find evidence that supports this hypothesis, which is robust after controlling such variables as infrastructure, and other transmission channels of financial development.

Cross-border acquisitions constitute the main form of Chinese OFDI, Using the patent applications data of A-share listed companies from 2008 to 2015, this paper provides empirical evidence on the relationship between cross-border acquisitions and innovation activities of the acquirer. To account for the possibility that performance differences arise due to the selection, we uses a nonlinear difference-in-differences approach combined with propensity score matching to create an appropriate control group of firms. The results indicate a considerable increase in post-acquisition innovation in the acquirer, and the effect is lasting but declining year by year. Moreover, we also find that the number of the invention and utility patent application increases significantly in those firms after the acquisition. Which means that the acquirer firms pursue the quality of innovation instead of its numbers.

Corporate fraud happens in groups recently. Using corporate fraud sample in A-share listed company from 2000-2016, this paper explores the characteristic and factors that affect fraud occurrence from the perspective of “peer effect”. We show a significant positive regional peer effect of corporate fraud in China. Other companies’ fraud significantly raises the company’s probability of breaking the market rules in the same region. “Peer effect” of information disclosure fraud is most obvious among all the fraud type. Corporate frauds contagion regionally mainly through two mechanisms: imitation learning and observation learning. Heterogeneity analysis shows company frauds are more affected by those with the same ownership type in regional peers. Further analysis shows that the possibility of fraud is reduced and the “peer effect” is weakened significantly after China's 18th Party Congress. This analysis reveals the regional peer effect characteristic of corporate fraud and provides an empirical support for regulation activities in recent years from the perspective of inhibiting illegal contagion of behavior.

This paper examines the effect of brokerage covering foreign listing companies on domestic analyst earnings forecast accuracy. We find that the analyst forecasts of an A-share company is more accurate after the brokerage covers a foreign listing company in the same industry, indicating that covering foreign listing companies can create spillover effects to domestic analysts. Further analysis shows that this spillover effect is more pronounced for experienced analysts and for less informative companies. This study provides further insights on the spillover effect brought by the brokerage extending overseas business and the factors that affect analyst forecast accuracy.