During the past 40 years of reform and opening up, China's financial system has evolved from scratch and undergone tremendous changes. At present, China has basically built a modern financial system with vitality and international competitiveness that is compatible with the socialist market economy with Chinese characteristics. In the past 40 years, profound changes have also taken place in modern monetary economics and worldwide policy practice of central banks. As the central bank of the world's largest emerging and developing economies in transition, China's monetary policy authorities face more complicated constraints, research of the People's Bank of China (PBC) provides a reliable support for promoting the development of China's financial system and central bank's scientific decision-making, which not only synchronizes with the world, but also has its own distinct characteristics. Based on the progress of monetary economics and the policy changes of central banks accompanying the ten-year cycle fluctuation of the world economy, and combined with the knowledge map analysis of the research of the Federal Reserve, European central banks and central banks of emerging economies, this paper summarizes worldwide research progress of central banks in the past 40 years and the experience of China, aiming at further promoting the theoretical research of the central bank and better facilitating the high-quality financial development.
   The first decade was the “great inflation” period from the late 1970s to the late 1980s. In order to tame the “inflation wild horse”, the modern quantity theory of money reached its peak, and monetary policy in developed economies shifted from discretionary choice to rule-based quantitative targeting.
   During this period, domestic research mainly focused on the coordination of finance and credit, the functions of the central bank and the restructuring of the financial system. Comprehensive balance theory of finance and credit has still been an important analytical framework in China's macroeconomic and financial fields up till now. The PBC became independent from the Ministry of Finance in 1978, marking that China began to distinguish the functions of fiscal management and financial regulation, and finance began to play a unique role in allocating social resources.
   The second decade was the first decade of the “great moderation” era from the late 1980s to the late 1990s, during which the monetary policy framework of “single target and single tool” was gradually established, and the “second central bank revolution” characterized by independence and inflation targeting was gradually launched. At the same time, influenced by the academic trend of “single target and single tool”, the separation between monetary policy and financial supervision gradually became the mainstream trend, and a large number of literatures on principal-agent and mechanism design also provided theoretical proof for this trend. During this period, emerging market countries were faced with the realistic shock of “trilemma” under the condition of open economy.
   In the 1990s, the PBC began to focus on the relationship between monetary policy and money supply, gradually scaled down the scope of direct intervention, and finally formed the monetary policy framework of indirect regulation in the modern sense with broad money supply as intermediate target, inflation-based multiple targets, comprehensive use of various policy tools, which was marked by the abolition of credit scale management and the reopening of RMB open market operations, and achieved the first major transformation of the monetary policy regulatory framework. At the same time, the PBC conducted a large number of in-depth studies on strengthening the micro-financial subject, building the financial market and improving the policy mechanism, which has strongly promoted the development, reform and opening up of China's financial system and provided the necessary micro-foundation and institutional conditions for indirect regulation.
   The third decade was the last decade of the “great moderation” era from the late 1990s to the outbreak of the international financial crisis in 2008. In this decade, research on financial liberalization became mainstream and led to global deregulation. “Race to the bottom” makes separate supervision extremely unsuitable for the trend of financial conglomeration, which has buried the hidden danger of financial crisis. Meanwhile, emerging economies have learned from the Asian financial crisis, actively adjusted their economic structures and policy systems, and thus accumulated sufficient experience and policy space to tackle the impact of the crisis.
   During this period, researchers of the PBC did not stick to the existing theories, but strived to tightly combine short-term macro-control with medium and long-term financial reform, and put forward theoretical analysis and policy propositions conducive to promoting financial reform according to China's actual conditions. It attached great importance to “online repair” of the financial system, completed the shareholding reform of state-owned commercial banks through the injection of foreign exchange reserves, and completed the reform of rural credit cooperatives through the replacement of central bank bills in an incentive-compatible manner, laying a good micro-foundation for resisting the impact of the global financial crisis. The classical “impossible triangle” theory is expanded, and the theory of intermediate institutional arrangement is explored and applied in Chinese practice. In terms of perfecting the transmission mechanism of monetary policy, the PBC has a good grasp of the balance between “quantity” and “price” in monetary control.
   In the fourth decade, which was after the “great recession” of 2008, the reflection of the crisis continues. The outbreak of the crisis exposed the defects of mainstream economic theory and the research paradigm. During this period, global central bank research mainly concentrated in four themes: introducing financial factors into general equilibrium models systematically, global experiments of unconventional monetary policy and its normalization, macro-prudential policy and prevention of systemic financial risks, and the new ideas and practices of financial development.
   Over the past decade, the PBC's research has been consistent with the post-crisis reflections of global central banks. Researchers of the PBC carried out analysis of macroeconomic models quite early in China, and were also one of the leaders in building dynamic stochastic general equilibrium (DSGE) models and applying DSGE models on Chinese issues. China has rich policy practice in using monetary policy tools to cope with the impact of the crisis. The PBC has stressed the importance of price stability while taking into account other objectives such as financial stability and attached great importance to the fundamental role of structural reform. The PBC has long been actively exploring the establishment of a macro-prudential policy framework suited to China's national conditions, and has been in the forefront of global mainstream theoretical research. Throughout the whole process of financial reform, development and stability, it has been applying the five new development concepts of innovation, coordination, green development, openness and sharing. Together with the international community, the PBC has made active explorations and useful innovations in both theory and practice.
   As an area closely linked to policy, real challenges have always been the greatest motivation of central bank research. At present, China is still faced with two long-standing structural contradiction in financing system, namely, low proportion of direct financing, especially equity financing, and imbalance between the financing status of small and micro enterprises and private enterprises and their proportions in the national economy. The new mission of deepening financial structural reform calls for a new breakthrough in the theory of financial structural reform in China. It also makes us look forward to achieving greater results as soon as possible under the impetus of deepening financial supply-side structural reform.

Asset leverage has been the focus of academic research since the recent global financial crisis, and deleveraging has been at the heart of policy discussion. Leveraging and deleveraging are associated with the rise and fall of asset prices.
   In the modern financial system, collateral-based financial markets and monetary markets have become increasingly important. Investors can use their assets as collateral to borrow money. For instance, if a haircut is 20%, they can borrow an amount equal to 80% of the asset value (here Loan-to-Value, or LTV is 80%). Generally, for an asset, the following holds: leverage=1/(1-LTV)=1/haircut. The haircut reflects the lender's fear that the value of the collateral will fall in the future. The greater the fear, the higher the haircut, hence the leverage will be lower.
   Leverage theory a la Geanakoplos shows that an increase in leverage will increase the asset price, because higher leverage better reflects optimism about the price; while due to short-sale constraints, the pessimistic view cannot be incorporated in the price. Leverage-induced boom-bust cycles lead to a fragile financial system and a volatile economy. Leverage cycles are a recurring historical phenomenon. Margin finance in the stock and housing markets is related to the Great Depression of 1929–1933 and the Great Recession following the 2008 financial crisis, respectively. China's stock market crash of 2015 is also related to margin finance.
   Although theory and history both have shown the importance of the leverage cycle, due to the endogeneity of leverage and asset prices in the financial system, it is notoriously hard to establish the causal effect of leverage on asset prices. This study is the first to exploit a natural experiment in China's bond markets in which the same type of bonds traded in both the inter-bank market and the exchange has differential regulatory margin requirements. It exploits this experiment to identify the causal effect of leverage by using data on bonds issued from January 2017 to August 2017 in these two markets.
   The study makes the following contributions. First, it is among the first to use a natural experiment to identify the causal effects of leverage on asset prices. Second, it sheds light on the market microstructure in the bond market; third, it sheds light on macro-prudential regulation and monetary policy.
   The natural experiment is as follows. The China Securities Depository and Clearing Corporation Limited (CSDC) is in charge of the registration, depository, and clearing of bonds listed on the exchange, while the Shanghai Clearing House is in charge of those listed in the inter-bank market. On April 7^th, 2017, the CSDC adjusted the pledging qualification for corporate bonds and removed from the collateral basket all corporate bonds listed on the exchange with a rating below AAA. This change only affected bonds issued after April 7^th, 2017.
   In this context, this paper tries to show that the change in spreads of AA bonds listed on the exchange is significantly larger than those listed on the inter-bank bond market.
   The main idea is to exploit this new regulation as a natural experiment, thus the AA bonds listed on the exchange are taken as the treatment group and those in the inter-bank bond market as the control group. Using a difference-in-differences methodology, we test whether the collateral requirement (hence leverage) caused a change in price. The sample is the AA bonds issued on the exchange (including both the Shanghai and Shenzhen Stock Exchanges) between January and August 2017.
   The paper finds that leverage can increase the price of a bond by as much as 70 basis points. This finding is consistent with theoretical predictions, and is robust to tests with different time windows for the new regulation and to placebo tests. This paper also tests for parallel trends to see whether companies in the sample strategically choose the venue of issuance, and finds that potential strategic shopping does not affect the results.
   The paper thus establishes the causal effect of leverage on asset prices. It has important implications for financial markets and monetary policy. For a long time, economists and central bankers have regarded interest rates as the most important variable in the economy. However, in the modern collateral-based financial system, leverage is sometimes more important. In terms of monetary policy, central banks have never regarded leverage as a tool, and this neglect has caused the failure of interest rate-based monetary policy and the recurrence of leverage cycles. An ideal monetary policy should take both leverage and interest rates into account.

China's comprehensive financial reforms were accompanied by the rapid integration of financial institutions including banks, securities, and insurance companies and the continual introduction of cross-businesses and cross-products such that mixed financial operations have become a trend. This not only exacerbates the cross-sector and cross-market spread of risk, but increases the possible cross-contagion of financial risk. When a crisis occurs in one industry, the cross-contagion and resonance of risk may further induce systemic financial risk, threatening China's financial security. At present, preventing and reducing systemic risk and safeguarding financial security are the focus of the whole society. However, it is not easy to prevent systemic risk, and the accurate measurement of risk is a prerequisite for scientific prevention. Only through real-time monitoring and effective forewarning can we hold the bottom line for systemic risk and national financial security. Research on monitoring and early warning signs of systemic risk spillover among China's banking, securities, and insurance sectors will not only contribute to the prevention of cross-sector risk, but also help to prevent systemic financial risk and defend the security of the entire financial system.
   To carry out real-time monitoring and effective early forewarning of systemic risk spillover in China's financial sector based on the CoES indicator (Adrian and Brunnermeier, 2016) and the traditional left-tail perspective, we also include the right-tail perspective. We subsequently build upper ΔCoES and lower ΔCoES measures as real-time monitoring and forward-looking warning indicators, respectively, of systemic risk under a unified CoES framework. We also take advantage of CoVaR and LRMES to propose a more effective and accurate calculation method for these indicators. We select the banking, securities, and insurance industry index in the Shenwan second-class industry index to proxy for these three financial sectors. The modified CoES indicators are used to monitor and predict the systemic risk spillover among China's financial sectors. Based on the data, this paper tests the forward-looking and early warning characteristics of the upper ΔCoES and the real-time characteristics of the lower ΔCoES.
   The results suggest that there are significant and asymmetric systemic risk spillover effects among the three financial sectors. While the banking sector is the main sender of systemic risk, the securities sector is the main recipient. Risk spillover among China's financial sectors shows significant co-movement and cyclicality, and the upside risk spillover is higher than that of the downside. At the same time, the upper ΔCoES is significantly ahead of the lower ΔCoES, and can therefore be used as a forward-looking warning indicator of systemic risk. In addition, the lower ΔCoES can lead the ΔCoVaR, and the short-term ΔCoES calculated based on the MES estimation method indicates that the lower ΔCoES is more suitable as a real-time indicator of systemic risk.
   There are two main policy implications of these results. In the cross-sectional dimension, according to the role and status of the different financial sectors in systemic risk transmission, the supervisory authority should select regulatory objectives and policy tools to carry out differentiated monitoring and prevention. As the banking sector is the main sender of systemic risk, the focus of China's systemic risk prevention should be the banking sector. Reducing risk spillover from the banking sector is the key to preventing and defusing systemic financial risk and maintaining the security and stability of the financial system. As the securities sector is the main recipient of systemic risk, we should pay attention to improving this sector's ability to resist risk and reducing its systemic vulnerability. In the time dimension, the supervisory authority should not only monitor the real-time dynamics of the systemic risk spillover, but also build effective early-warning indicators of systemic risk and improve the mechanisms of risk monitoring, early warning, and early intervention. The supervisory authority can use the lower and upper ΔCoES constructed in this paper as real-time monitoring and forward-looking warning indicators to further improve the systemic risk monitoring and early warning system in China.

Since the reform and opening up of China, the openness and investment environment have continuously improved and the sustained rapid economic growth has led to China gradually becoming a major destination for global transnational investment. However, the Chinese economy is entering a “new normal,” with overcapacity and environmental pollution becoming increasingly prominent. In line with the principle that “lucid waters and lush mountains are invaluable assets,” building an ecological civilization is the millennium plan for the sustainable development of the Chinese nation, and the party's 19th National Congress report clearly proposes to implement stringent environmental protection. In addition, global foreign direct investment (FDI) has generally declined and the international investment environment is not encouraging. Although foreign investment in mainland China has maintained growth, the growth rate has declined. In the face of the unequal international investment environment and increasingly serious domestic environmental problems, it is of great practical significance to study the impact of environmental regulation on FDI in light of the current state of the Chinese economy.
   This paper uses data envelopment analysis to explore the factors influencing China's FDI changes under environmental regulation. Using the sub-vector distance function of FDI, we define the production technology of environmental and non-environmental regulation to construct an index of the cost effect of environmental regulation and measure the cost of environmental regulation of 30 provinces in China over the 1999–2015 period. Furthermore, we decompose the changes in actual FDI and test the factors influencing the actual FDI changes under environmental regulations using a counterfactual test. We use the input and output data from China's 30 provinces (except Tibet) for 1998–2015, including four input data, three good outputs, and two bad outputs. The data come mainly from the statistical yearbook.
   The main conclusions of this paper are as follows. After 2001, the cost of environmental regulation for all provinces in China showed an overall upward trend that was most obvious in the eastern region and least so in the northeast. Under environmental regulation the actual FDI in all provinces first accelerated and then slowed down. Prior to 2015, secondary industries attracted the most FDI. From the beginning of 2014, tertiary industries showed a significant increase in FDI. Thus, the “supply-side structural reform” has achieved initial results and promoted the optimization and upgrading of China's industrial structure, with the tertiary industry offering great potential for China's economic development. However, we must continue to accelerate structural adjustment. The counterfactual test shows that the factors affecting the change in FDI in different periods are not the same, but as the intensity of reform and opening up increased, the influence of total factor productivity and industrial structure on the distribution of FDI was significantly enhanced. Therefore, under the “new normal” economy, we still require steady growth to effectively promote supply-side structural reform and unswervingly expand the reform and opening up. The literature has mostly used measurement models and needs specific functional forms. There have also been many endogenous problems and subjective choices of instrumental variables. In addition, the data related to environmental regulation were generally not accessible, and the mechanism of impact is still unclear.
   The contribution of this paper is the construction of a correlation index using the sub-vector distance function of FDI to comprehensively decompose the changes in FDI under environmental regulation without specific data related to environmental regulation while avoiding the problem of endogeneity. The paper not only links the changes in FDI to total factor productivity and other input factors, but also analyzes the impact of China's economic structural change on FDI. Further research directions from this paper would be to construct an environmental regulation cost index for various industries, decompose the FDI inflows of various industries, analyze the factors influencing FDI inflows in various industries, and make recommendations on the introduction of foreign capital under the new opening-up pattern.

The Chinese government, due to its tax claim on cash flows, is de facto the largest minority shareholder in almost all corporations. Therefore, it has the incentive to impose stringent tax enforcement, which has a spillover effect on corporate governance. However, serious identification issues arise in research as a result of the inability to overcome endogeneity problems, such as reverse causality and missing variables. A key issue in the study of such problems is how to clearly identify the motives for government tax enforcement. The fiscal PMC reform is a natural experiment that provides the opportunity to examine how tax enforcement affects corporate earnings management, as it enables provinces to directly contact the counties regarding business matters such as revenue and expenditure division, transfer payments, capital transactions, financial budgets, and year-end settlements.This reform changes government tax enforcement incentives at the county level. In view of this, we use the data on industrial enterprises in China from 1998 to 2006, treat the PMC reform as an exogenous shock, and investigate whether tax enforcement affects corporate governance from the perspective of enterprise earnings management. Earnings management is an important aspect of corporate governance that affects not only corporate information transparency and investment efficiency, but also the market information environment and resource allocation. Therefore, earnings management is significant for enterprises, markets, and economic development.Theoretically, when a county-level government strengthens tax enforcement due to tax incentives, less earnings management is observed, while loosening tax enforcement produces the opposite effect. We find that the PMC reform effectively reduces the earnings management behavior of enterprises. Compared with the unreformed counties, the reformed counties' earnings quality is 10.7% higher than average. This conclusion passes a series of endogeneity and robustness tests, including the dynamic effect test, propensity score matching sample regression, alternative dependent (independent) variables, and subsample analysis. We also find that the impact of PMC reform is only significant in enterprises under the jurisdiction of county-level governments, and when the county-level government has a large fiscal deficit or a large tax base, the PMC reform influence is stronger, further indicating that PMC reform can improve county-level government tax enforcement incentives, and thus the quality of corporate earnings. Finally, we find that the PMC reform reduces tax avoidance behavior by enterprises and significantly increases the fiscal revenue of governments. Overall, our findings show that the PMC reform increases county-level government financial incentives, stimulates county-level governments to enforce tax laws strictly, reduces the earnings management and tax avoidance of enterprises within their jurisdictions, and increases county-level government fiscal revenue.The main contributions of this paper are as follows. First, it provides evidence on how government tax enforcement affects corporate earnings management based on a natural experiment, thus enriching the literature on government tax enforcement and corporate governance. Second, it provides micro evidence for how the PMC reform alleviates financial difficulties for county-level governments, and confirms that the PMC reform encourages county-level government to enforce tax laws more strictly, thereby reducing tax avoidance behavior and increasing the fiscal revenue of the government. Third, the paper expands the research on fiscal decentralization and government governance structures, and provides a reference for how to optimize county-level government functions. It finds that the PMC reform encourages county-level government to further fulfill its agency responsibilities and impose stringent tax enforcement, optimizing county-level government functions. The conclusion of this paper is that improving county-level government financial autonomy and the tax-sharing ratio by optimizing government structures can alleviate the inter-governmental agency problem and stimulate county-level governments at the frontline of economic construction to enforce tax laws more strictly. This not only improves county government fiscal revenue, but also alleviates financial difficulties for county-level governments and optimizes the regional accounting information environment, which plays an important role in optimizing resource allocation, improving investment efficiency, and promoting economic development.

Since China's accession to the WTO in 2001, its foreign trade has developed rapidly and total imports have greatly increased. Firms that wish to further expand their scale of imports or import new products from different countries need more funds to pay the fixed and variable import costs. Therefore, financial constraints are an important factor affecting firm import behavior. The greater the financial constraints on firms, the more difficult it is for them to obtain funds through internal cash flow, bank loans, and other means, which may have a significant negative effect on their import behavior. Against this background, it is highly relevant to investigate the impact of financial constraints on firm import behavior.
   Previous research has studied the impact of financial constraints on export growth at the firm level using both theoretical and empirical methods. While import firms and export firms have many similarities, such as large scale, high productivity, and similar trade patterns at both product and national levels, the determinants of imports are more complicated and quite different from those of exports. Generally speaking, the effect of financial constraints on firm imports has scarcely been studied and demands urgent attention.
   Based on the methods of Muûls (2014) and Bernard et al. (2009), this study divides firm import value into four parts: the number of markets imported from, the number of products imported, the density of imports, and the average value of imports. The number of markets imported from and the number of products imported indicate the extensive margin, and the average value of imports indicates the intensive margin. Following the literature, we measure the financial constraints firms face by defining a new comprehensive indicator Score A and Score B based on seven financial indicators: the operating cash flow as the total assets ratio, accounts receivable turnover rate, interest coverage ratio, current ratio, liquidation ratio, tangible assets ratio, and total return on assets. We then combine product-level data from Chinese customs trade data and comprehensive firm-level data of Chinese industrial firms to empirically analyze the impact of financial constraints on firm import behavior. We also analyze the different effects of financial constraints on the import behavior of different firms from five angles, including ownership pattern, import mode, export status, industry type, and province and city level. Finally, we compare the differences in the impact of financial constraints on imports of firms with and without a financial crisis.
   The main contributions of this study are as follows. (1) We focus on firm import rather than export behavior and analyze the impact of financial constraints. (2) We expand the margins of trade from the two or three used in prior studies to four margins. (3) Instead of a single index, we build a comprehensive index to measure firm financial constraints based on both internal financial liquidity and external credit characteristics. (4) We analyze the different effects of financial constraints on firm import behavior from multiple perspectives.
   Our study draws the following conclusions. (1) Financial constraints have no significant impact on the intensive margin, but negatively affect the extensive margin and the decision to import, indicating that it is difficult for firms to bear the fixed cost of expanding new markets or importing new products. (2) The impact of financial constraint on imports is greater for domestic firms, processing trades, and firms that both import and export compared to foreign firms, general trades, and firms that only import. (3) Different external financial environments lead to significant differences in the impact of financial constraints on firm import behavior such that the financial crisis increased the sensitivity of firm import behavior to financial constraints.

The bank-firm relationship has long been of interest in the financial literature. Before a lending decision, the commercial bank typically requires the company to provide its “hard” information, such as financial statements and credit score data, to mitigate the problem of information asymmetry and reduce the potential default risk. However, this approach is less effective if the hard information is insufficient, especially for small companies. On the other hand, a good bank-firm relationship can help to transmit “soft” information, such as the character and reliability of the company's owner, which may also improve the company's credit financing capacity. However, quantitatively measuring the strength of the bank-firm relationship remains a challenge in the financial literature.
   In the context of the big data paradigm, we introduce the co-occurrence analysis approach and develop an innovative indicator for bank-firm relationships based on their co-occurrence in news texts. The co-occurrence analysis is a text-mining method that has been extensively applied for knowledge discovery in many domains. The key idea is to use the co-occurrence frequencies of given keywords in a corpus to represent their relationship strength. Regarding the bank–firm relationship, a good relationship can manifest not only in frequent business cooperation, but also in non-business interactions, such as mutually organizing or participating in public events, because both formal and informal communications can effectively deliver the company's soft information to the bank. Meanwhile, these mutual events are likely to appear in the news and thus be documented by online media if they are important enough. Hence, we propose to use the news co-occurrence frequency of a specific bank-company pairing to quantify their relationship strength. Relative to most traditional measurement approaches, the news co-occurrence indicator can comprehensively reflect both business and non-business bank-firm relationships, and has the advantage of data availability.
   Following this idea, we use the news co-occurrence indicator to quantitatively measure the relationships between 238 listed real estate companies and 19 major domestic banks from 2009 to 2014 in China, using Baidu News as the source of the news text. We test the validity of this indicator by comparing it with the corresponding bank's occurrence frequencies in the corresponding company's annual reports and its chief sources of debt financing.
   We then examine the effects of the bank–firm relationship on the company's credit financing capacity. To alleviate the potential endogeneity problem, we introduce two instrumental variables for the bank–firm relationship, namely the number of senior executives in the company with a banking background and the geographical distance between the headquarters of the company and the bank, and then estimate the models using the 2SLS method. The empirical results suggest that a stronger bank-firm relationship can significantly improve the company's credit availability, but is not generally effective in reducing the cost of credit. In addition, such patterns are heterogeneous across companies; in particular, the bank–firm relationship effect is more pronounced for smaller or less profitable companies from the perspective of either credit availability or credit cost. Furthermore, a company can improve its credit availability more efficiently by choosing to further strengthen its strongest bank relationship rather than establishing relationships with new banks. Strengthening the relationship with SOE versus non-SOE banks achieves similar effects. Further empirical analysis shows that the news co-occurrence measuring approach can be extended to other industries, and corresponding empirical models suggest similar conclusions.
   This study is among the first to introduce big data and text-mining technology to research on the bank-firm relationship. It contributes to the literature in two ways. First, we propose an innovative and effective bank-firm relationship indicator based on their co-occurrence frequencies in news text, which can comprehensively reflect the relationship from both the business and non-business perspective. Hence, it can serve as an important complement to more traditional measures of the bank–firm relationship. Second, our empirical findings provide not only new evidence for the effects of the bank-firm relationship on a company's credit financing capacity, but also additional insights into the heterogeneities of such effects across companies and banks.

Housing prices in China's major cities have been surging since 2003. Given that this may be one of the main macro risks to the real economy in China, great effort has gone into establishing the economic forces driving the large swings in China's housing market. Asset pricing theory typically tries to answer this question by relating an asset's price to its future cash flow uncertainty, usually in the form of a present-value statement. Among the various measures of valuation, the rental yield, equivalent to the dividend-price ratio in the stock market, is of particular importance in assessing the housing market because it reveals an agent's expectations of future returns and rental growth in the housing market. Moreover, given the rapid rise in rental prices in major cities over the past few years, the rental yield has triggered a fresh wave of attention and public discussion regarding the forces driving the fluctuation in rental yield.
   From the perspective of asset pricing, researchers usually use the dynamic Gordon growth model, which is originally developed by Campbell and Shiller to decompose the stock market dividend yield in order to relate rental yield to future rental growth and housing returns. However, in the literature of real estate economics, a large body of work on housing market fluctuations applies the user cost of housing model. This model is in fact a no-arbitrage condition in which the marginal benefits (rental price) equal the marginal cost of housing including the cost of capital, the potential capital gain or loss, and the risk premium of owning relative to renting a house.
   Therefore, we incorporate the user cost of housing model into the standard Campbell-Shiller present-value model of rental yield to decompose the rental yield into three components: the expected cost of capital, which measures the cost of capital of buying a house; the expected risk premium of owing versus renting, which gauges the premium of house tenure as a hedge against the risk of renting a house; and the expected future rent growth, which captures the value of housing service flows in the future. Based on our theoretical model, we exploit a unique matched dataset of the sale prices and rents for the four Chinese first-tier cities compiled by the DTZ Company, the base-year rental yield from CICC, and interest rates from the PBC's website. We then construct empirical proxies for the relevant expectations in our present-value model using the vector autoregressive method. We apply the variance decomposition approach to examine quantitatively how much of the variation in rental yield comes from the three components mentioned above. Our results show that the cost of capital plays the most vital role in all four major cities, followed by changes in the risk of owning versus renting. While innovation in rental growth also plays a part in the fluctuation of rental yield, it is not as significant as the cost of capital. Recently in particular, the risk premium of renting relative to owning a house in most first-tier cities seems to be rising.
   Our contribution is three-fold. First, to our knowledge, no prior study has applied the dynamic Gordon growth model in China's four major cities to examine the driving forces in the housing market by exploiting a unique sample of matched transaction data on housing and rental prices. This exercise extends the research perspective and framework of the existing literature. Second, and more importantly, in contrast to the common practice of decomposing return into the risk-free rate and risk premium in the stock market, and the static relation between rental yield and housing user cost in the real estate economics literature, this study combines the standard present-value model with the classical user cost of housing model to build a dynamic user cost model to identify the forces driving the fluctuations in rental yield in China's housing market. Third, our approach provides a new model-based measure of the risk premium of owning versus renting, which is not directly observable, and gauges its impact on housing market fluctuations.

Should stock index futures be restricted during a stock market crisis, and how do such restrictions affect the relationship between stock index futures and the spot market？ It is important to systematically evaluate whether these restrictive trading measures have sufficiently solid regulatory motivation and achieve their intended effects. To fulfil the above task, empirical research is required from multiple perspectives, including the price lead-lag relationship and the volatility spillover between stock index futures and spot prices. This study aims to quantify the impact of regulations restricting the trading of stock index futures on the relationship between stock index futures and spot prices in terms of the lead-lag relationship and price discovery function.
   We use the information share model (I-S model) proposed by Hasbrouck (1995) to test the price discovery function of the stock index futures. To further test their effects on the stock market under different market conditions and whether stock index futures can play the role of boosting or depressing prices we also introduce a quantile regression method.
   Using high frequency data from the CSI 300 index and the corresponding stock index futures in China, this study investigates the influence of the restrictive trading regulations during the 2015 Chinese equity market crisis on the relationship between the Chinese stock index futures market and the stock market. We divide the research sample into two stages, pre-and post-restriction, and examine the relationship between stock index futures market and spot stock market prices in three samples: the whole sample, pre-restriction, and post-restriction.
   Using the I-S, P-T, and quantile regression models, the empirical results show that before the trading restrictions were implemented, the stock index futures had a greater impact on stock market prices, especially during the sharp price decline. Because the large increase in transaction costs on the futures market reduced the information share and component share weightings of the futures market, the restrictive trading regulations weakened the influence of the futures market on the stock market, changing the mode from “depressing more than boosting” and thus enhancing the effect of stock index futures in lifting the market.
   The potential contributions of this paper are as follows. First, to our knowledge, this is the first study to directly investigate and quantify the impact of restrictive futures trading regulations on the relationship between stock index futures and spot prices. It provides direct empirical evidence for the transaction cost hypothesis of the price discovery function of stock index futures. This study also takes advantage of the restrictive trading regulations during the stock market crisis in 2015, which led to a sharp rise in transaction costs of stock index futures, and directly observes and quantifies the resulting impact on the relationship between these futures and spot prices. Therefore, this study can be regarded as a direct empirical analysis of the transaction cost hypothesis supporting the price discovery function of stock index futures, compared to the indirect evidence provided by previous research. Second, this study helps to assess whether such restrictive trading regulations have regulatory effects during a stock market crisis. From the perspective of policy design, the restrictive measures of regulatory authorities on stock index futures trading during the stock market crisis produced certain expected effects, that is, the restrictive trading regulations did weaken the impact of stock index futures on the stock market, and to an extent changed the asymmetric effect of “depressing rather than boosting,” thus enhancing the impact of stock index futures on the stock market when prices rise. Furthermore, compared to Miao et al. (2017), who provide empirical evidence from the perspective of volatility spillover between stock index futures and the spot market to measure the regulatory motivation of restrictive trading policies, this research provides empirical evidence to measure the regulatory effects from the price lead-lag perspective between stock index futures and the spot market.

It is common for companies to retain their former CEO on the board (Brickley et al.,1999;Korn Ferry, 2014; Lee, 2011). However, whether companies should have former CEO directors is theoretically controversial. On the one hand, former CEO directors have accumulated firm and industry expertise and social relations with company stakeholders, allowing them to fulfill their tasks effectively (Andres et al., 2014; Fahlenbrach et al., 2011).On the other hand, former CEO directors may hinder the authority of the incumbent CEO, lack independence, and prevent the company from canceling projects implemented during their tenure(Andres et al., 2014; Fahlenbrach et al., 2011), thus creating barriers to the company's efforts to improve operations through resource adjustments. Therefore, the economic consequences of retaining former CEO directors is an interesting topic that requires empirical testing. However, such research remains rare. The literature focuses on the effects of former CEO directors on management incentives and corporate performance (e.g. Andres et al.,2014; Bermig and Frick,2010;Evans et al.,2010; Fahlenbrach et al.,2011; Fiss,2006; Quigley and Hambrick,2012), while no one has investigated the impact of former CEO directors on company resource adjustment behavior.
   This paper uses the data on Chinese listed companies to study the impact of former CEO directors on company resource adjustment behavior from the perspective of cost stickiness. Cost behavior is a result of resource adjustment. Cost stickiness indicates that resource input is “easy to increase and hard to reduce,” which is an important perspective that reflects corporate resource adjustment behavior. We find that former CEO directors increase cost stickiness, and that this effect is more pronounced when managerial ownership is lower, the company is non-state controlled, and industry competition is less intense. We also find that former CEO directors increase cost stickiness whether they are retained as the chairman or ordinary director, and whether it is a family business or not. These results indicate that former CEO directors increase cost stickiness by hindering the corporation's reduction of resource input. These results are not explained by the effects of the former CEO directors' knowledge, experience, and social capital on corporate resource adjustment costs, or the effects of former CEO directors on management agency problems.
   This paper contributes to the literature in several ways. First, it enriches the research on the economic consequences of former CEO directors from the perspective of cost stickiness, which reflects the asymmetric characteristics of company resource adjustment. As cost stickiness has a direct impact on company performance, thefindings deepen our understanding of the channel through which a former CEO affectscompany performance. Second, as far as we know, no prior research has explored the impact of former CEO directors on cost stickiness. By filling this gap, this paper enriches our understanding of how cost stickiness is affected by personnel arrangements on the board, and is the first to provide empirical evidence for the “adjustment cost view” of cost stickiness from the perspective of former CEO directors.
   The findings have important implications for theoretical research and practice. First, we should consider the asymmetrical effects of former CEO directors on company resource adjustment when studying their effects on company performance. Second, when studying the economic consequences of former CEO directors, the moderating effects of ownership and market competition should be considered. Third, as the asymmetrical impact of former CEO directors on company resource adjustment is likely to benefit the former CEO director instead of the company, the practice of retaining former CEOs on the board may require regulation. Fourth, the empirical evidence in this paper can help companies to adjust resources more efficiently through adjusting board structure. For example, as former CEO directors make resource input “easy to increase and hard to reduce, "companies may need to avoid retaining the former CEO on the board to better promote the downward adjustment of resources.

Open-end funds are one of the most popular asset management tools worldwide, and the past decade has also witnessed their blossoming in China. By the end of 2016, the net asset value of open-end funds in China had increased to 8,886.899 billion RMB, gaining a market share of 97.74% in the whole fund market. Therefore, what most influences Chinese investors when selecting open-end funds is a topic worth exploring.
   The literature on how investors make investment decisions is mainly focused on the U.S. market. Some studies find that CAPM alpha explains U.S. mutual fund flows (Barber et al., 2016) and hedge fund flows (Agarwal et al., 2018) better than the alphas of more sophisticated models. As the Chinese fund market is still emerging, and the Chinese market differs from that of the U.S. in terms of microstructure, we are interested in how Chinese investors identify manager ability. Which aspect of fund performance do they value most when making decisions on buying or redeeming？ The risk exposure or the alpha？ And which alpha？ In addition, institutional investors are believed to have greater professional skill and information advantage compared with individual investors, and thus to be less prone to irrational issues when making decisions (Daniel et al., 1997). Do they therefore behave differently from individual investors during fund selection？
   The main contribution of this paper lies in seeking to identify how investors distinguish the fund manager's active management ability from fund risk exposure over a long period. We thus compare the impact of alphas adjusted by different risk factors on the net cash flow of funds and the influence of risk exposure. Our paper also supplements the literature on the “redemption anomaly” in China's fund market by providing evidence from a new perspective. Given that rational investment decisions select funds with stable alphas, we explore the link between investor redemption behavior and the fund's alpha rather than its performance as a whole. We find differences between institutional and individual investors in the evaluation of risk adjustment benchmarks and fund manager ability, and thus provide new evidence for their behavioral differences.
   In the empirical section, we focus on 64 open-end funds lasting from January 1, 2006 to December 31, 2016, drawing all data from CSMAR. We find that the current and lagged raw excess return, CAPM alpha, Fama-French 3-factor alpha, and Fama-French 5-factor alpha all have strong explanatory power for net fund flows. The current alphas are positively correlated with net capital flow whereas the lagged alphas are negatively correlated. The results indicate that the lagged alpha has a greater effect on buying decisions, whereas the contemporaneous alpha is more responsible for redeeming behavior. Investors tend to redeem their shares when the contemporaneous fund alpha is high, perhaps to realize immediate gains. Such behavior corresponds to the “redemption anomaly” still in suspense based on the perspective of the funds' alpha, which may be related to the disposal effect in China's fund market and is adverse to the long-term development of China's fund industry.
   Overall, we discover that simple models such as the raw excess return and CAPM alpha can better explain changes in net fund flows, which may be due to a lack of sufficient investment tools in the Chinese market. Although some risk factors are recognized by the market, it remains difficult for individual investors to hedge against these factors at low cost or to obtain a corresponding benefit in the actual investment. Therefore, investors may resort to simple models such as CAPM as a benchmark and classify the compensation for other potential risk factors as the active management ability of the fund manager. In subsample tests, we find that individual investors rely more on simple adjustments in evaluating a fund managers' ability, while institutional investors make stricter distinctions. Further, we find that the advantages of raw excess return and CAPM alpha are mainly concentrated in periods of lower market volatility and higher investor sentiment.
   In addition, we find that fund flows are far more sensitive to risk exposure than to manager ability (alpha), contrary to the findings in the U.S. market (Barber et al., 2016). The tendency of Chinese investors to pay more attention to risk exposure/fund style than manager ability may lead to herding behavior that further aggravates the volatility of the capital market. Therefore, it is necessary to equip individual investors in China with more professional knowledge and more financial products to guide them, particularly to fully understand risk and enable them to manage it effectively.