China's shadow banking sector develops rapidly and the structures are becoming more and more sophisticated, which enhance the liquidity and systemic risks and dampen macro policy effectiveness. From monetary supply and demand sides respectively, we do empirical analysis on the relationship between banking off-balance sheet wealth management (OWM) and monetary policy. The regressions based on the theory of financial disintermediation shows that the OWM really enlarge the money multiplier, which makes central bank's control of broad money even more difficult and decreasing the effectiveness of quantity monetary policy. The expansion of shadow banking, esp. the increasing OWM outsourcing and leverage through non-banking sectors, exaggerates the liquidity demand and enlarges the margin of deposit and non-deposit institutions. The empirical studies also show that OWM expansion is closely related with the deposit and loan rates, esp. the lowered deposit rates. From now on, for one hand, we should enhance financial supervision and macro-prudential policy to offset the defects of the quantity based monetary policy, and for the other hand, it is urgent to pay more attention to the price target instead of quantity indicators, liberalize the dual tracks of interest rates, improved the monetary tools and turn the quantity based monetary policy to priced based policy mode.

After the reform of exchange rate formation mechanism in August 2015, RMB exchange rate had been through continued and sharp depreciation. There is a view that it is the inevitable result of the “monetary overhang” in China. Based on the analysis of the creation process of credit money, we point out that the high money demand incurred by the rapid economic growth and the low efficiency of money use are the main reasons of the high absolute value of M2 and the ratio of M2/GDP in China. So it is not proper to jump into the conclusion that “monetary overhang” exists in China and the deprecation of RMB exchange rate is inevitable. It is the fragility of the financial system rather than the volume of money that is the biggest challenge of keeping exchange rate stability and fulfilling the successful transformation of exchange rate regime. So we bring the policy suggestions that economic growth is the key, expectation is important, financial system needs healthy and open-up should prudent.

With the progress of interest rate liberalization and the development of commercial bank interest rate pricing mechanism, the efficiency of China's monetary policy via interest rate channel has also been continuously improved. Based on the macro time series data and micro survey data from January 2008 to June 2017, we examine the efficiency of China's monetary policy interest rate transmission to loan interest rates. In general, the benchmark interest rate is the main factor that affects the loan interest rates. After the restrictions on loan interest rate was cancelled, the efficiency of the money market interest rate transmission to loan interest rates was significantly increased. At the same time, the influence of the benchmark interest rate on the loan interest rates was slightly reduced, but still dominated. Through case analysis, we find that it is the micro-mechanism of commercial bank loan interest rate pricing which changes the monetary policy interest rate transmission. Further analysis shows that sources of funds and fluctuations in market interest rates are important factors affecting the efficiency of money market rate transmission. This paper has important practical significance for improving China's price-based monetary policy system and the transformation of China's monetary policy framework.

On the basis of the domestic and foreign financial cycle researches,this paper designs the empirical method of China's financial cycle. According to the institutional characteristics and development practice of China's economic and financial system, this paper selects the generalized credit and generalized credit /GDP and real estate price as the construction index of China's financial cycle; improves the rationality and effectiveness of the empirical research on China's financial cycle by adjusting the parameter setting of the band-pass filter and turning-point analysis method.On this basis, this paper conducts an empirical analysis and cross test on China's financial cycle with data from 1st quarter of 1998 to 1st quarter of 2018. The empirical results show that China's financial short cycle is highly consistent with the guidance of government's macro policy, and interlaced with the economic short cycle, and the duration and volatility of the financial cycle is significantly lower than that of the western developed countries. This reflects that China's active monetary policy and financial regulation play a key role in control and smooth the economic cycle, and reduce fluctuations of China's financial system in the long run.

This paper investigates whether China is a special host country of US FDI. We rely on the data of US direct investment in 156 countries and carry out empirical studies. The estimation results show that, as a whole, US FDI in China did not deviate from the should-be value. In the manufacturing sector, there is evidence indicating that US investment in China was above the should-be value. With comparison to other countries, in China, market size, level of economic development, economic growth and trade openness promote more US FDI in the manufacturing sector. However, institutional distance prevents US FDI entering the manufacturing sector more strongly in China than in other countries. Compared to the manufacturing sector, the service sector in China should do a little more to improve US FDI. Based on these research findings, we believe that there are two reasons why US FDI in China seemed lower than the should-be value. On the one hand, the promoting factors like market size, level of economic development, economic growth and trade openness are always emphasized. However, the preventing factors like geographical distance, institutional distance and cultural distance are usually neglected. On the other hand, the potential of the service sector in attracting US FDI has not been fully realized, which leads to a negative impact on the total US FDI.

Preventing local governments’ debt risk and encouraging local financing platforms’ market-oriented transformation are both cores of the Central Economic Working Conference in recent years. This paper focuses on the connective effects of bank lines of credit on platforms’ market-oriented transformation. We find that: (1) Bank lines of credit provide bond market with additional information. Higher credit lines can significantly improve credit ratings and reduce bonds’ financing costs. (2) Platforms with higher credit lines have higher propensity to carry out positive debt replacement, while the replacement scales are also higher. Moreover, the propensity of positive debt replacement is stronger with platforms’ market-oriented transforming progress. The policy implications of this paper are that platforms should enhance their profitability to elicit the positive influence of bank lines of credit. More importantly, fiscal and tax reform should be pushed to identify the boarder of government and market and enhance financial institution’s supervision, furthering the transform from bank loan dependent political bodies to market-oriented bodies.

The economy is facing the risk of high leverage in China, and it’s of urgency for the Supply-side Reform to de-leverage. Using data from Chinese Industrial Enterprises Database, this paper explores the effect of tax reduction caused by value-added tax reform on firms’ leverage. The difference-in-differences analysis shows that value-added tax reform increases long-term leverage while decreases current leverage. The effect varies across ownership, firm size, and between export and non-export firms. The findings contribute to the literature by investigating the relationship between value-added tax and leverage (by maturity), and provide evidence for structural tax-reduction policy aimed at de-leverage in practice.

This paper examines the impact of green credit policy of 2012 on investment and financing behavior of firms in pollution-intensive industries. By using the DID method, we find that green credit policy leads to a significant decrease in interest-bearing liabilities and long-term debt for firms in pollution-intensive industries. The result is more economically significant in the subsample of large state-owned firms in heavily polluted provinces or areas.In addition, we find that following the implement of green credit policy, the cost of debt financing significantly increased for firms in pollution-intensive industries.Moreover, green credit policy has a lagged inhibitory effect on investment, with large and state-owned firms react more strongly in reducing their investments.Therefore, it is clear that green credit policy effectively constrains the development of pollution-intensive firms and make these firms pay for the cost of pollution.By continuing to strengthen green credit policy and enhance supervision and management, we can put into practice the guiding principles from the 19^th National Congress of the CPC, accelerate the change of growth model and promote ecological civilization of our socialist market economy.

Qualified foreign institutional investors (QFIIs) may play an important role as external monitoring power in a market with strict capital account regulation. Using a data set of Chinese A-share listed firms from 2006 to 2015, and following the method of Kim and Verrecchia (2001) to measure the information disclosure quality, we find a positive correlation between QFII ownership and firm’s information disclosure quality. After controlling for endogeneity problems with Difference-in-Differences approaches, placebo test, instrumental variable method and reverse causal test, we find that the QFII have a positive, causal effect on firm’s information disclosure, which suggests that QFII ownership is an external corporate governance mechanism in China. Moreover, we find that the impact is more pronounced for firms with better governance mechanisms and audited by international Big 4 auditing firms. Finally, we find that QFII can enhance corporate information disclosure through channels such as increased analyst coverage and higher pay-performance sensitivity of executives. Thus, increasing the number of QFII and gradually relaxing the capital account regulation can benefit firms’ information disclosure, thus to protect the interests of small and medium sized shareholders and promote a healthy development of China's capital market.

This paper empirically tests the impact of fund ownership by using the data of China' s non-financial listed firms during the period of 2009-2017, and compares two mechanisms, “monitoring managers” or “restricting tunneling”. We find that: (1) the equity ownership by funds has a significant positive effect on listed firms' value, and the effect is stronger in firms where the controlling shareholders held a higher proportion of stock; (2) not only active and passive funds significantly increase the firms' value, quasi index funds also increase the firms' value; (3)the number of funds holding stock in the firm can significantly enhance the firm value, while the impact of fund ownership significantly decreases when controlling the number of funds. These results suggest the main contributing mechanism of the fund in China is more likely to be restricting the controlling shareholder's expropriation, instead of monitoring managers.

Agricultural insurance is an important measure for managing agricultural risk and reducing the uncertainty of agricultural production, but agricultural insurance market failure exists globally. This paper summarizes the development trend and typical experience of agricultural insurance in major economies including China, and focus on the issues and challenges of China's agricultural insurance system. Key policy implications are discussed for establishing a multi-level agricultural insurance system.Firstly, clearly defineobjectives of China'sagricultural insurance, and clarify its differences from objectives of macro-economic policies as well as the positive impacts of agricultural insurance,and set a long-term strategic developmentplan. Secondly, verify the effectiveness of agricultural insurance innovation products, and avoid new risks arising from agricultural insurance innovation. Thirdly, reform the organizational form of damage assessment in agricultural insurance industry, given decentralized feature of Chinese farmers. Fourthly, put more efforts on micro-level research to provide effective measures for the demand deficiency issue ofagricultural insurance in China. Fifthly, do thoroughly and comprehensively analysis about the efficiency of support for agricultural insurance, provide insights for dynamically adjustmentsin government support intensity and its form.

As the starting point of studying China’s option market, this paper compares two empirical differences about option-implied variances between China and US. The risk-return trade-off requires a positive relationship between option-implied variances and future equity premiums. Such a relation is validated in the US market but is violated in China. Also, modern option pricing theories predict higher option-implied variances than realized variances. Such an effect is weaker in China than in US. These two findings suggest some directions for future research on China’s option market.