Summary: The unprecedented rise in China's household leverage has attracted a great deal of public attention. In this paper, we examine how household borrowing responds to large movements in asset prices. The answer to this question is fundamental in macroeconomics and finance and has crucial implications for understanding how asset price shocks generate business cycle fluctuations. The literature suggests that high household leverage might lead to increased mortgage default rates and trigger an economic recession (Midrigan and Philippon, 2011; Mian and Sufi, 2009, 2011). Another line of research has tried to explain the increase in household leverage by the rise in house prices (Hurst and Stafford, 2004; Cooper, 2009; Mian and Sufi, 2011). These studies have documented an important collateral channel whereby an increase in the value of a self-owned house will relax the household's financial constraints, and make the household borrow and consume more. However, the sudden increase in household leverage in China has yet to be explained. In this paper, we examine whether the collateral channel exists in China. We also propose two additional channels via which the surge in house prices may have contributed to the sudden increase in household leverage.
   Based on household level housing and debt information drawn from the Chinese Family Panel Studies (CFPS) for 2014 and 2016, we show that the appreciation in house prices indeed contribute to the increase in household leverage. Quantitatively, we find that a 100% increase in the price of a house leads to 288.1% and 39.2% increases in household debt and leverage, respectively. By further splitting our sample into several subsamples, we also find that the house price movements have heterogeneous effects on household leverage. Specifically, we find that urban hukou households with spouses and children have a greater increase in household leverage than rural hukou households without spouses and children. Moreover, we find that some of the data patterns are at odds with or cannot be well explained by the “collateral channel.” Therefore, we propose two additional channels, the “financing channel” and the “speculation channel,” and confirm that these channels have a strong influence on our sample. Furthermore, we find that most households finance their housing purchases by bank loans instead of private lending.
   Our paper contributes to the literature on household leverage in two important ways. First, the “borrowing for housing purchase” scenario provides a possible explanation for the unprecedented increase and highly imbalanced geographical distribution of household leverage in China. Since 2000, the literature has increasingly focused on the rapid expansion of total household debt and household leverage in developed countries, and views this changing pattern as the product of the increased availability of mortgage credit and other innovative consumption loans in the U.S. and Europe (Casolaro et al., 2006; Mian and Sufi, 2011). However, to the best of our knowledge, no studies have sought to explain the features of household leverage in China. In this sense, this paper is the first attempt to build a bridge between these two vitally important characteristics of Chinese economy, namely, the rapid increases in the housing prices and household leverage in big cities.
   Second, our paper contributes to the literature by providing three channels through which increased housing prices might lead to increased household leverage. In particular, the two additional channels proposed in this paper complement the collateral channel examined in the literature (Berger et al., 2015; Aladangady, 2017; Cheng, 2017). The collateral model shows that increased house prices can relax the households' borrowing constraints by increasing their collateral value, and thereby generate significant increases in household consumption and leverage (Ortalo-Magné and Rady, 2008; Mian and Sufi, 2011), which is most relevant to our paper. However, distinct from the literature, we find that there is no collateral channel in our sample. A possible explanation for this finding is that the rise in house prices is more significant and persistent after 2008 than before 2008, thus increasing the incentives for speculation in the later period.

Summary: In recent years, the profits of entity enterprises, especially those in the manufacturing sector, have been on the wane under the double impact of an economic downturn and overcapacity. In contrast, financial enterprises have earned excess profits with their monopoly position. The profit gap between the manufacturing and financial sectors encourages entity enterprises to become financialized to obtain excess returns. This has caused entities to gradually deviate from their main business, hollowing out the manufacturing sector, while also stimulating capital demand by entities who are allocating resources to financial assets. This has resulted in a shift from a real to a virtual economy.
   Interest rate deregulation not only helps to eliminate credit discrimination, match loan risks with loan interest rates, and improve the debt financing conditions, it also strengthens competition in the financial industry, reduces the debt financing costs of enterprises, and leads to profit rate equalization between the real and virtual economies. As a result, interest rate deregulation also affects the investment and financing structures of micro-enterprises. China has gradually formed a market-based interest rate decision mechanism and deregulated interest rates. It is important to study how this reformation has affected macroeconomic growth and the behavior of micro-enterprises. Although the one-size-fits-all policy of loosening interest rate control makes it difficult to identify its microeconomic effects, the dual properties of China's entities provides a natural experiment for examining how interest rates affect the financing of enterprises.
   By selecting China's A-share non-financial listed companies in the 2001-2015 period as our sample, and by taking the distinct cancellation of the upmost limit and the lowest limit of loan interest rates in 2004 and 2013 as a quasi-natural experiment, the study uses the different property rights of companies to construct a difference-in-difference (DID) model for investigating how interest rate deregulation affects the financialization of the entity enterprises. The results show that the deregulation of the lowest loan interest rate significantly inhibits the financialization of non-state enterprises, whereas the deregulation of the upper limit of loan interest rates has no significant effect, which supports the “market arbitrage” concept. The mechanism test reveals that a relaxation in the deregulation of the lower limit of the loan interest rate significantly inhibits debt costs' erosion of enterprise profits. A further theoretical mechanism test shows that the stronger the profitability, the larger the scale, and the smaller the market competition pressure, the more significant the effect of the deregulation of lower loan interest rate on the suppression of the non-state enterprises' financialization. These results show that the profit margin gap between the real economy and the virtual economy is an important institutional incentive for Chinese entity enterprises' financialization. Therefore, reforming financial marketization will help to inhibit the virtualization of entity enterprises, improve the positive interaction between the real economy and the virtual economy, and boost the rapid development of the real economy.
   This study makes three main academic contributions. First, it reveals the specific mechanism through which financial marketization reform leads to the financialization of entities from the perspective of interest rate deregulation. It clarifies the significance of financial marketization reform in building a benign interaction between the real economy and the virtual economy. Second, it examines the consequences of interest rate deregulation on the financialization of the entity enterprises, and demonstrates not only the positive impact of financial marketization reform, as represented by interest rate deregulation, but also confirms enterprises' market arbitrage motive for financialization. Third, the quasi-natural experiment and the DID model help to alleviate the possible endogeneity problem between interest rate marketization and financialization of entities.
   The following issues remain to be explored in future studies: (1) the impact of interest rate marketization, especially benchmark interest rate marketization, on the relationship between the real and virtual economies, along with the deepening of interest rate marketization reform; (2) whether the interest rate marketization influences the behaviors of micro-enterprises by virtue of other mechanisms; and (3) whether a more multidimensional perspective of interest rate marketization can more accurately determine its economic consequences.

Summary: The Shanghai Interbank Offered Rate (Shibor) is an important candidate for the benchmark interest rate in China's financial market. However, this interest rate has two major shortcomings in that it is unstable and easy to manipulate. In response to these shortcomings, on September 24, 2013, a self-regulation mechanism was introduced. In July 2014, the mechanism was expanded for the first time, with 93 basic members being added alongside the 10 core members. The basic members can participate in off-market quotations and are competitors in on-market quotations. The self-regulation mechanism regularly assesses the quotations of member banks and eliminates banks with low-quality quotations. Although this mechanism will undoubtedly have an important impact on bank quotations, the nature of this effect is still not fully understood. Thus, in this paper, we examine the influence of the self-regulation mechanism on Shibor volatility and the herd behavior in quotations. The results can provide theoretical references to further improve the relevant systems.
   We use the first expansion of the self-regulation mechanism in July 2014 as a dummy variable. We then analyze the daily rate of Shibor from 2007 to 2017 using the ARJI-GARCH model. The results show that after the self-regulation mechanism is implemented, the volatility of the Shibor from overnight to one month decreases significantly. Using the Shibor monthly standard deviation as an explanatory variable, the results of the OLS regressions and propensity score matching also show that the defect of the Shibor fluctuation from overnight to one month is greatly improved after the implementation of the self-regulation mechanism.
   However, because a stable Shibor may not be more effective, we further examine whether the self-regulation mechanism makes the behavior of the quotation banks more conservative and leads them to adopt a more herd-like strategy when quoting. Bohl et al. (2017) pointed out that Chang et al. (2000) may have underestimated the herd behavior in the market. Thus, we improve the ARJI-GARCH model and design a new method that can detect more fragile herding behavior. By comparing the dispersion before and after the self-regulation mechanism is implemented, we are able to generate the following conclusions. First, the degree of quotation dispersion increases significantly after the self-regulation mechanism is implemented, which means that the behavior of the quotation banks is not completely conservative. Second, before the self-regulation mechanism comes into play, the free-riding motive is the main reason for the herding behavior, with the three-month or longer period Shibor showing obvious herding behavior when the interest rate fluctuates significantly. Third, after the self-regulation mechanism is implemented, the motivation for maintaining reputation is the main cause of herding behavior, as the Shibor from overnight to one month begins to show herding behavior when the interest rate fluctuations are large. Thus, although the self-regulation mechanism reduces the overall volatility of Shibor, it also enhances the herd behavior in quotations and fails to address the easy manipulation of Shibor. Therefore, the design of the elimination mechanism in the self-regulation mechanism needs to be improved, and the benchmark interest rate position of Shibor for a period of more than three months should been strengthened. After all, because self-regulation is not compulsory, there is the possibility of industry collusion. In the future, more attention needs to be paid to the construction of relevant legal systems.
   The contributions of this paper are as follows. First, this paper is the first to analyze the impact of the self-regulation mechanism on Shibor quotations, and the motivation and characteristics of the herding behavior of the quotation banks. Second, based on the literature, we construct a new method that can detect more fragile herding behavior. The results show that without this new method, we are unable to find sufficient evidence of herding behavior in the short-term Shibor before the self-regulation mechanism is implemented.

Summary: The role of financial derivatives in stabilizing the spot market has always been a concern of macro policy makers and academics. Stock index futures played a role in the 2015 A-share stock market crash by promoting spot volatility, and knowing whether China's Treasury bond futures could repeat this role is key to preventing systemic risks in the financial market in the context of China's continuous financial deleveraging and strong supervision. In a developed Treasury bond futures market, the inherent characteristics of a futures market, such as leverage trading, low cost, and low short-selling restrictions, have a stabilizing effect on the spot market. However, China has an immature futures market, and it is necessary to improve market functions and mechanisms. Macro financial security and financial market stability require regulators to clarify the intrinsic function and role of futures and to minimize the negative effects of financial derivatives. The traditional analytical framework ignores the financial cycle risk and its superposition on the economic cycle. This study combines the market information transmission path and the micro mechanism of participant behavior in the Treasury bond futures market with China's financial cycle volatility to explore the mechanism that links futures contract to spot market volatility.
   The study uses the EGARCH model to describe the wave aggregation effect, as it does not need to limit the positive and negative coefficients of the variance equation. The VAR-GARCH-BEKK model is used to study the volatility spillover effect. Kogan et al. (2009) propose that the influence of base difference on conditional volatility is asymmetric. In this study, the asymmetry of base difference is introduced into the model to analyze the influence of current base differences on market volatility. Indicators such as expected and unexpected trading volume in the Treasury bond market, futures speculation and hedging behavior, and financial cycle fluctuation are constructed. A financial cycle index is synthesized using credit, credit/GDP, real estate price, and M2 year-on-year growth rate. The research sample consists of the main contract of 5-year Treasury bond futures . The bond sample is divided into newly issued deliverable Treasury bond and deliverable Treasury bond with the same yield.
   The results show that the volatility of China's Treasury bond market is significantly reduced after the introduction of a 5-year Treasury bond futures contract, that is, the futures market has a stabilizing effect. The Treasury bond futures market mitigates the impact of financial cycle volatility on spot market volatility. Through the information channel, the futures market increases the depth of the spot market, reduces the impact of spot trading volume on spot price volatility, and enhances the effect of market information transfer after adjusting for trading mechanisms such as fluctuation limit, margin ratio, and gradient position limit. The positive and negative basis differences have significant asymmetric effects on the fluctuation of bonds, but the positive basis difference is more effective. Among the futures investor behavior, the activity of speculators in Treasury bond futures is directly proportional to the spot volatility, whereas that of hedgers is inversely proportional to spot volatility.
   The study makes three contributions. First, focusing on the analysis of the micro mechanisms of market volatility, the study explores the path through which the Treasury bond futures market stabilizes the spot market by considering information transitions and different types of participants. Second, the study analyzes the impact of financial cycle risk on the volatility of the Treasury bond spot market. Third, this study explores whether the Treasury bond futures market in China restrains the impact of financial cycle risk on the stability of the spot market, and provides evidence that the Treasury bond futures contract is an effective interest rate risk management tool under financial cycle fluctuation. To stabilize the operation of the Treasury bond market and establish a mechanism for financial market stability mechanism, we should strengthen the supervision of speculative trading in Treasury bond futures, prevent excessive speculation,and enhance futures hedging.

Summary: Guided by the principles that “rich people help the poor” and “redistribution puts more emphasis on equity”, China recently implemented a new concept of shared development based on changes to the fiscal distribution system. As an important part of the financial poverty relief mechanism, taxation policies have played an important role in promoting the targeted alleviation of poverty. In this paper, we examine the poverty reduction effects of cuts to indirect taxes under the unified framework of the targeted alleviation of financial poverty. Our analysis addresses the lack of research on tax poverty alleviation in the literature. By evaluating whether the tax reduction policies for indirect tax can provide immediate relief for the poor, we also provide theoretical support for the large-scale tax cut policies that China is currently implementing to help reduce poverty.
   We use CFPS2012 household survey data and the China input and output tables in 2012 to calculate the indirect tax burden of households using a micro-simulation method based on the premise of shifting forward. We use the pro-poor growth index provided in the literature as a reference. Inspired by the index, which measures the “trickle-down effect” of the economy, we also construct a quantitative method for identifying and measuring the pro-poor nature of the tax system. Specifically, we use three poverty lines, two equivalent size adjustment methods, and three ways of weighting the poor population to conduct a comprehensive analysis of the pro-poor characteristics of indirect taxes. Furthermore, we estimate the generational differences in the indirect tax burden among family members of different ages.
   We present a number of empirical findings. First, indirect tax is a form of “negative income” and the collection of indirect taxes increases the breadth, depth, and intensity of poverty. Second, our empirical analyses show that the pro-poor index of indirect tax is greater than 1 in both the urban and rural samples, which indicates that indirect taxes are not pro-poor. Thus, policies aimed at reducing indirect taxes can help the poor, although they provide more benefits to urban poor households than rural poor households. However, tax reduction policies provide little help for the severely poor who struggle to feed and clothe themselves. Third, value-added tax has a more obvious pro-rich effect than consumption tax and sales tax. Because consumption tax covers some luxury goods, it can play a “pro-poor” role in redistributing income. However, the pro-poor index of consumption tax is still greater than 1 most of the time, largely because rural low-income groups spend part of their income on items such as alcohol and tobacco, which are subject to consumption tax, and indirectly bear the consumption tax on fuel when they travel. Fourth, children, adults, and the elderly are all bearers of indirect taxes. Our empirical results show that poor families pay a higher proportion of indirect taxes for raising children. In contrast, they pay a smaller proportion of indirect taxes for supporting the old.
   Based on the empirical results of this paper, we propose the following policy suggestions. First, the government should continue to step up efforts to promote large-scale indirect tax reduction policies to support the targeted alleviation of poverty, and use differentiated value-added tax and consumption tax adjustment strategies to change the “pro-rich nature” of indirect tax. Second, the government should combine the indirect tax cuts with policies that give full play to the auxiliary role of direct tax in alleviating poverty, and gradually form a multi adjustment system in which different taxes are coordinated to alleviate and reduce poverty. Third, in the long run, China's tax system should be gradually transformed to the pattern that main proportion of revenue is derived tares from direct taxes rather than indirect taxes.
   Overall, the government can achieve fairer income distribution by reducing the proportion of indirect tax and increasing the progressive structure of the tax system. However, tax is not the only mechanism for alleviating financial poverty. The government should also ensure that the basic needs of the poor are met through public transfer payments and improve the social security system to resolve the pension problems faced by poor households.

Summary: Wealth management products (WMPs) are a kind of off-the-balance-sheet asset in commercial banks. Compared to deposits, there are fewer limits on the interest rate of WMPs. Furthermore, WMPs have no impact on loan-to-deposit ratios, and the capital raised by WMPs can be used more flexibly (Hachem and Song, 2016; Acharya et al., 2016). As WMPs are more loosely regulated, previous studies have considered WMPs as a form of shadow banking (Hachem and Song, 2016; Zhu et al., 2016; Acharya et al., 2016). Specifically, WMPs are considered a type of regulatory arbitrage behavior by commercial banks. However, most studies focused on the effect of financial regulation on commercial banks' issuance of WMPs: they investigated the macro influence of WMPs on the monetary market and the conduction mechanism of monetary policy. The following questions have not been addressed: (1) Do idiosyncratic differences between commercial banks affect their issuance of WMPs under certain financial regulation contexts？ (2) What micro-factors affect the issuance of WMPs by commercial banks？
   Building on Acharya et al. (2016) and Hachem and Song (2016), we study the idiosyncratic characteristics of commercial banks. Based on manually collected data of commercial banks of China, we investigate the relationship between commercial banks' capacity to absorb deposits and the issuance of WMPs. We also investigate the economic consequences of issuing WMPs from the perspective of commercial banks' operating risks.
   We find that the capacity to absorb deposits is one of the most important determinants of the scale of WMPs issued by commercial banks. The lower a commercial bank's capacity to absorb deposits, the more WMPs it issues and the higher the yield rate of the WMPs. Specifically, we measure four factors affecting banks' capacity to absorb deposits: (1) the type of commercial banks, (2) the quantity of branches, (3) the local loan-to-deposit ratios, and (4) the intensity of local financial institutions. We find the following: regional and small-scale city banks issue more WMPs with higher yield rates than national banks such as the four state-owned commercial banks (hereafter the “Big 4”); commercial banks with fewer branches issue more WMPs with higher yield rates; commercial banks in territories with higher local loan-to-deposit ratios issue more WMPs at higher yield rates; and banks in locations with more intensive local financial institutions issue more WMPs with higher yield rates. We also find that the more non-guaranteed WMPs issued by commercial banks, the higher their operating risk is, as non-guaranteed WMPs magnify the volatility of the banks' operating performance.
   Further study shows that the relationship between banks' capacity to absorb deposits and the issuance of WMPs is more pronounced when the interbank rate is high, indicating that the financial market is tight (Acharya et al., 2016). Commercial banks, which lack deposits, prefer to issue short-term WMPs because, as previous studies have shown, short-term WMPs are more cost-effective for commercial banks (Luo et al., 2013).
   This study makes two contributions. (1) Building on previous studies (Hachem and Song, 2016; Acharya et al., 2016; Zhu et al., 2016), our study reveals the substitutional relationship of WMPs and deposits in commercial banks. We find that the capacity of commercial banks to absorb deposits is one of the most significant factors affecting the issuance and yield rates of WMPs. This study also reveals a new aspect of WMPs, which enriches the existing research on regulatory arbitrage and shadow banking. (2) This study analyzes the economic consequences of issuing WMPs in terms of individual risk for commercial banks. The results show that non-guaranteed WMPs increase the operating risk of commercial banks. Our findings may indicate that the uncertainty of non-guaranteed WMPs increases volatility in the business performance of commercial banks. These findings are useful references for regulators interested in financial system reform and the reform of the deposit interest rate system in China.

Summary: Group-affiliated companies are linked in various formal and informal ways. At the same time, with the acceleration of company diversification, the organizational structure of business groups has gradually developed into a network structure including vertical and horizontal relationships. The literature has extensively explored the advantages and disadvantages of business groups from the perspective of operating efficiency and firm value (Bertrand et al., 2002). However, limited attention has been paid to the economic consequences of the network structure among group-affiliated companies.
   This study examines the contagion effect of an irregularities announcement among group-affiliated companies in the capital market. First, companies in the same business group have similar organizational structure and corporate governance characteristics. As studies have shown that irregularities are related to organizational structure and weak corporate governance, an irregularity in one group-affiliated company may indicate a greater likelihood of irregular behavior among other companies in the group. In addition, group-affiliated companies are connected through various ties (i.e., related party transactions, common personnel relations, and the establishment of financial companies). These ties provide group-affiliated companies with more channels through which to learn from and imitate each other, increasing the likelihood of a contagion effect within the group. Finally, an irregularities announcement provides new information to the market, based on which investors update their valuation of the other listed companies within the same business group (Chen and Goh, 2010). Therefore, when one group-affiliated company announces an irregularity event, investors reassess the reliability of the corporate governance and accounting performance of other companies in the same group, causing a contagion effect.
   Using the data of firms listed on the Shanghai and Shenzhen Stock Exchanges from 2003 to 2015, we find that: (1) a company's irregularity announcement can result in investor reassessment of other companies in the group and a significant decline in their stock prices. However, the contagion effect exists only when the irregularity relates to fraudulent financial reporting. (2) Further channel tests of the contagion effect show that the low earning quality of contagion firms and the existence of financial companies within the group can explain the decline in the stock prices. (3) Cross-sectional tests indicate that a company's internal and external governance can affect the contagion effect. Specifically, we find that contagion effects are stronger for state-owned enterprises and for companies operating in less-developed areas, covered by fewer analysts, and with higher ownership concentration.
   By studying the contagion effect of irregularities announcements within group-affiliated companies, our study makes three contributions. First, it provides richer and more robust evidence to better understand the organizational structure of business groups in emerging markets. The existing literature focuses on the contagion effect of performance or risk within a business group, and finds that the channel basically originates from related-party transactions, guarantees, and debt relationships among group-affiliated companies. In contrast, the irregularities data in this study is taken from the public disclosures of regulatory agencies such as the China Securities Regulatory Commission, the Ministry of Finance, and the exchange, thus our setting is more exogenous. Further, we use event study method to better identify causality and eliminate the influence of other factors. In the mechanism test, we find that the contagion effect within the group exists even with no related-party transaction or guarantee relationship, thus extending the prior literature.
   Second, this paper adds to the growing body of literature on the economic consequences of irregularities. Most existing studies only consider the impact of economic consequences for the irregularity company, while a few discuss the externalities of the irregularities announcement by listed companies through the joint auditors, the same industry, and the same region (Gleason et al., 2008; Beatty et al., 2013; Gul et al., 2018). On the other hand, Khanna and Rivkin (2001) suggest that the existing research ignores the influence of business group factors on firm behavior. Our study shows that irregularities have externalities within a business group, indicating that the overall negative impact of irregularities on the market is greater than that on the irregularity companies themselves as documented in prior studies. This further indicates a need to increase the supervision of irregularities.
   Finally, the results of our study are expected to provide a corresponding explanation for stock price synchronicity in emerging markets. Exisiting studies have shown that stock price synchronicity is significantly higher in China (Morck et al., 2000), which relates to China's institutional background. Our study shows that the contagion effect of irregularities within a business group may provide a new explanation for China's higher stock price synchronicity.

Summary: In recent years, the rapid development of the high-speed railway (HSR) among different regions in China has accelerated the flow of innovation factors such as high-quality labor, knowledge, technology, information, and experience. This not only promotes a spillover of knowledge and information, but also has an important impact on regional innovation. Based on a review of the literature, this paper uses the flow of innovation factors under the framework of the New Economic Geography to explore the impact of the HSR on the regional innovation and its spatial disparity. We take HSR availability data for 287 cities from 2004 to 2015 as a quasi-natural experimental sample to analyze the empirical effect of the HSR on regional innovation performance.
   According to the results, the opening of the HSR significantly improved regional innovation performance during the study period by promoting the flow of innovation factors such as high-quality labor. The HSR also had an important impact on the spatial disparity of regional innovation, as innovation performance was higher for cities with HSR than for those without. This means that extending the HSR could further widen the innovation disparity between cities. Both effects also show significant time-dynamic characteristics. Estimation results for different areas show that the opening of HSR can promote innovation performance and widen spatial disparities in the eastern area, yet has no significant impact on innovation performance and its spatial disparity in the central and western areas due to the brain drain caused by the opening of the HSR.
   The policy implications of the above conclusions are as follows. Firstly, local governments should constantly promote HSR construction according to the practical demand for economic and social development, and improve the deep integration of HSR construction and regional development to maximize the HSR's role in promoting regional innovation activity. Secondly, to encourage the full flow of high-quality innovation factors among different regions, each area should build a sounder knowledge spillover system and eliminate institutional barriers. Thirdly, cities that remain without HSR should constantly improve their overall competitiveness through economic and social development to attract HSR investment. Such cities also need to improve their interconnection with cities that have HSR, and to integrate seamlessly through various channels to allow them to participate in the HSR “innovation circle.”
   This study makes several contributions. Firstly, it is one of the earliest studies to empirically examine the impact of HSR on regional innovation activity in China. It uses the difference-in-differences model and a quasi-natural experiment to research the HSR's economic effects. This study also examines the mechanism through which the HSR impacts on regional innovation performance from the perspective of the flow of innovation factors based on the NEG theory framework. Finally, it explores whether the opening of HSR has widened or narrowed the spatial disparity in regional innovation, inspiring a more comprehensive analysis of the impact of HSR on regional innovation and the optimization of China's regional innovation spatial pattern.
   Although the opening of HSR mainly accelerates the flow of high-quality labor, the increased flow of technology, information, and capital among different areas as a result of HSR construction also influence regional innovation activity. It would also be interesting to explore the direction (in- or outflow) of innovation factors after the opening of HSR and its impact on regional innovation performance and its spatial disparity if the relevant data are available.

Summary: Although human capital theory was a revolutionary and controversial concept when it was first proposed in the 1960s, it has evolved into one of the most universally accepted research objects in economics and other social sciences.The research on human capital and economic consumption has mainly been conducted at the theoretical or macro levelusingfactors such as economic growth, the wage contract, and life cycle. In contrast, studies from a micro perspective focus on the returns from investments in private education and health. As a result, little firm level research is available. Moreover, in recent years, the pay gap between executives and employees has attracted significant attention from the media, the public, and the government. For example, in January 1, 2015, the Chinese government implemented a salary reform scheme for central enterprise principals, targeting around 200 executives from 72 SOEs.This reform reducedthe executive-worker pay ratio to about eight times. However, further research is needed on the economic consequences of the intra-firm pay gap between executives and employees.
   In this paper, we examine the impact of the pay gap between executives and employees on the human capital structure of firms. Research has shown that the intra-firm pay gap has a significant influence on firm performance and productivity, and that this influence originates from the incentive effect of the pay gap on different levels of employees.We argue that the firm pay gap can affect the human capital structure of a firm by altering the incentives of both managers and employees. We use two competing theories to describe the economic incentives of pay gaps: tournament theory and comparison theory.In addition, we usethe economic theories of matching and managerial talent to explain some of our results. Practically, firms match the various abilities of managers by designing different pay policies. Moreover, different compensation contracts provide different choices for employees with different levels of education. Therefore, it is important to investigate how the pay gap affects the human capital structure of firms.
   We manually collect education data on the employees of Chinese listed firms from 2000 to 2015. Specifically, we classify human capital into three types: high education employees, medium education employees, and low education employees. We use the ratio of the average managers' compensation to the average employees' salary to measure the intra-firm pay gap. We obtain financial data and corporate governance information about the listed firms from the China Stock Market and Accounting Research (CSMAR) database and the WIND database. We also exclude firms from the financial industry.Our analyses generate the following findings. First, a firm's pay gap reduces the ratio of bachelor degree employees, and increases the ratio of employees with low education. Second,using an instrumental variable approach and a scenario analysis of the global economic crisis, we find that the pay gap has a causal impact on the human capital structure of firms. Third, for firms with a small pay gap,enlarging a firm's pay gap significantly increases the ratio of employees with a low education, whereas it reduces the ratio of employees with a mid-level education. A possible explanation for this is that employees with different levels of education have different degrees of bargaining power. However, for the firms with a high pay gap, increasing the pay gap has a positive effect in attracting employees with a high level of education who maybe future managers. Fourth,the relation between a firm's pay gap and the changes in the human capital structure are more salient in firms that are large or employ young executives. Finally,human capital has a significant mediating effect on the relationship between a firm's pay gap and innovation, which suggests thata high pay gap increases the ratio of highly educated employees and thus leads to more innovation.
   This paper makes three contributions to the literature. First, we measure firms' human capital using their employees' educational data, and thus are able to provide direct evidence of firms' human capital. Second, we examine the effects of the intra-firm pay dispersion on the structure of human capitalat the firm level, which provides a relatively new angle for uncovering the economic consequences of the intra-firm pay gap. Third, our findings provide clear policy implications by showing the relationship between the pay gap and a firm's human capital structure.To match the human capital structure to the development of firms, policy makers need to designan effective compensation system.

Summary: “Contagiousness” is one of the three basic characteristics of a stock price crash in that the contagious effects of a stock price crash may generate systemic financial risk. However, although scholars and regulators have recognized that stock price crashes can be contagious, there has been little in-depth follow-up research on the mechanism and channels of stock price crash contagion. As a result, there is little theoretical support for regulators to deal with the systemic financial risk caused by stock price crash contagion. Therefore, in this paper, we construct an analytical framework of stock price crash contagion based on investors' expectations and liquidity constraints, and examine the mechanism and channels of stock price crash contagion using data on the international capital market. Our results provide theoretical and empirical evidence for researchers and regulatory bodies to develop effective strategies for responding to stock price crash contagion.
   First, based on the literature, we propose two theoretical hypotheses concerning stock price crash contagion, namely, investors' rational expectations and liquidity constraints lead to contagion. Second, we construct a two-stage rational expectation equilibrium model based on informed traders and uninformed traders. The related securities crash signal is used as public information, and the decision-making model of informed and uninformed traders is introduced to analyze the contagion mechanism of stock price crash that investors expect to modify. Given that the collapse of related securities during a crash increases the liquidity constraints of informed traders, this paper identifies investors' liquidity constraints as a contagion mechanism of stock price crashes. Third, based on the data on the capital markets of 28 countries and regions from 2000 to 2016, we construct an empirical model to test the contagion of a global stock price crash. The test sample covers America, Europe, Africa, Asia, and Australia, and the results confirm the contagiousness and contagion mechanism of the stock price crash.
   Our analyses produce the following results. First, under the consistent expectations of investors, the prices of related securities assets deviate significantly from the mean value. Specifically, when a crash occurs, investors lower the prices of the target securities, which lead to stock price crash contagion. Second, insufficient liquidity of related securities is negatively related to the price of the target securities, such that insufficient liquidity of the related securities increases the probability of a collapse in the stock prices of the target securities. Third, a stock price crash can spread contagiously in countries or regions that have related capital markets. We also conduct a test of the contagion adjustment effect of a stock price crash. The test results show that improving the information transparency in the capital market and strengthening financial control can help reduce the contagious effects of stock price crashes in related countries or regions. To improve the robustness of our findings, we use the negative return skewness coefficient NCSKEW and fluctuation ratio DUVOL to measure the risk of a stock price crash and control the market situation, and the results confirm that a stock price crash will be contagious in related countries and regions.
   The innovation of this paper is that it considers the effect of investors' expectations and objective constraints on stock price crash contagion, and verifies the channels and mechanisms of international stock price crash contagion. Overall, we find that investor behavior, including investors' expectations and objective liquidity, is an important micro-mechanism of stock price crash contagion. Therefore, improving the quality of investors can help prevent stock price crash contagion. Moreover, we find that consistent expectations lead to stock price crash contagion. When similar stocks crash, it is difficult for investors to identify whether the crash is an individual risk or an overall risk, and the crash can easily to trigger consistent expectations of an overall crash of related securities. Therefore, improving information transparency in the capital market and reducing the levels of information asymmetry are important methods for preventing stock price crash contagion. In addition, the financial opening up and internationalization of the capital markets may enhance the effects of external stock price crashes. In this context, financial regulation can play a role in preventing stock price crash contagions during crises. Based on these conclusions, academics and regulatory departments should pay attention to the contagion mechanism of stock price crashes, and provide strategies for preventing stock price crash contagion from evolving into systemic financial risk.

Summary: In the past 20 years, Chinese art markets have become among the most important art auction markets globally. Since 2009, the turnover of Chinese art markets has been comparable in magnitude to those of the United States and the United Kingdom. According to statistics from the China Association of Auctioneers (CAA), the total turnover of Chinese art in mainland China and overseas regions accounted for 36% of the total global art auction turnover in 2017. The driving forces behind Chinese art markets' development are the abundant supply of Chinese cultural resources, rapid economic growth, and the growing wealth of collectors and investors. As art is an asset class and a consumption good, it derives both financial returns and aesthetic value. In addition, because artworks are not standardized assets and art markets are not transparent, risks and returns can both be very high. Amid the rise of China's wealthy population, art is often used as an asset allocation tool.
   Since the beginning of the 20^th century, many Chinese cultural relics have flowed abroad, usually to prosperous areas. Chinese onshore art markets are mainly concentrated in Beijing, and the offshore markets are concentrated in Hong Kong, New York and London. Chinese art has attracted the attention of international investors, and overseas auction houses have increased the number of Chinese art auctions. The overseas offshore market has become an important source of Chinese art auctions. Due to differences in Eastern and Western tastes, however, painting and calligraphy are the major categories in mainland China, while antiquesantiques, porcelain and jade artworks are more popular overseas.
   This paper investigates the performances and characteristics of major offshore and onshore Chinese art markets, including the major art auction markets in Beijing, Hong Kong, New York and London. This paper applies the Artron AMMA database of global Chinese art auction observations from 2000 to 2017 and computes global Chinese art price indices for Beijing, Hong Kong, New York and London. A hedonic model is used to construct these indices, which cover over 300,000 auction observations of Chinese paintings and calligraphies in major auction markets. The results show that the Beijing and Hong Kong markets are the two largest onshore and offshore art auction markets, and they have similar price trends.
   In addition, repeat sales are used to investigate the flows of Chinese art in offshore and onshore markets. Returns in the New York and London markets are lower than those in Beijing and Hong Kong; investors received the highest returns when their artworks were bought in Beijing and later sold in Hong Kong. The premiums in Hong Kong attract investors and collectors to this region, the largest offshore Chinese art market. Hong Kong's mature and safe investment environment contributes to the prosperous art market.
   The main contributions of this paper are as follows: (1) Based on auction observations of the world's major Chinese art markets, a hedonic pricing model is used to construct onshore and offshore art price indices to offer a more complete picture of Chinese art auction markets. (2) In addition, this paper compares characteristics of Chinese art across offshore and onshore markets in Beijing, Hong Kong, New York and London. (3) This paper also uses repeat sales sample to investigate the motivations and preferences of Chinese buyers. (4) Lastly, it offers a new perspective on the dynamics of offshore and onshore markets.
   The paper is organized as follows. After an introductory first section, the second section reviews the literature. The third section introduces the methodology and data sources. The fourth section analyzes the price indices and returns of Chinese art. In the fifth section, the connection between offshore and onshore art markets is explored. The sixth section concludes.