This article studies the relationship among industrial revolution, financial revolution, and systemic risk governance by examining the three industrial revolutions in human history. The three industrial revolutions had significantly improved productivity, transformed industrial production and social relations. The advanced technology innovations and applications, transformation of economic structure and evolution of social environments promoted development and upgrading of the financial sector. Subsequently, rapid capital accumulation and effective intermediation were essential in turning technological progress into industrial revolution, and financial revolution became an important catalyst of industrial revolution. However, if the rules, institutional arrangements and regulations could not catch up with the revolution in financial sector, the imbalances will build up and systemic risks accmulate, which would in turn trigger finanical crisis that would subsequently prompt major changes in the financial and regulatory systems.
The first industrial revolution established production process mechanization and industry specialization as the pattern of modern production and economic growth.Under the specific socio-economic environment in the UK, the swift industrial and business development drove the expansion of banking system and the emergence of a unified credit market that narrowed the credit spread among areas, and mitigated capital shortage in industrial areas. The first financial revolution, i.e. the rise of modern commercial banking system, provided massive fund support for the full-scale rise of the first industrial revolution. However, due to the weakness in risk management, rapid surge of bank credit accumulated massive risks in the financial system,which triggered frequent financial crises. After the financial crisis in 1825, the UK overhauled its financial system.The Bank of England gradually assumed central bank functions such as currency issuance, financial stability. The British financial industry entered into a century-long stable period thereafter.
During the second industrial revolution, the technological progress, economic expansion, and large-scale infrastructure building generated financing demands that stimulated the development of capital markets and investment bank business in the US. The second financial revolution, with the rise of modern investment banking system, restructured the capital foundation of the 2^nd industrial revolution. The development of capital market provided the financial infrastructure and capital for large-scale industrial development. The M&A deals helped optimize industrial and market structures, and facilitated the transformation of scientific and technological achievements into economic growth. But in the early stage of development, due to lack of regulation, speculation was rampant in the US capital market, stock price manipulation, insider-trading, and frauds went unchecked. Stock market panic occurred frequently. After the Great Depression, the U.S. introduced multiple legislations, created regulatory agency and self-discipline organizations for the security markets, and established the separation of banking and investment bank businesses. Along with the gradual development of the financial market regulatory framework, the U.S. capital market entered into a regulated and recovery era.
In the process of the third industrial revolution, the United States, with a large weapons industry that expanded on orders from military forces of multiple countries, found it imperative to transform its economic institutions into civilian industries through rapid development of small or medium size enterprises.The existing financing pattern could not meet such needs in economic growth. The third financial revolution, with the emergence of venture capital investment system, created new driving forces for the 3^rd industrial revolution. Venture capital not only provided direct financing for high-tech firms in their early stages, but also offered non-financial supports, including business consulting, strategic advice, resource network, and etc. In the relatively light-touch regulatory environment, capital flocked into the venture capital system and greatly eased the difficulty in financing for the startup technology firms. However, due to the focus on growth and lack of attention to risk management in the US regulatory system, the expansion in the financial industry also led to “irrational exuberance” from 1995 to 2001 and the burst of‘dot-com bubble’. As the Nasdaq was in its early stage and accounted for a limited share in U.S. capital market, the dot-com bubble caused limited damage on the economy. However, excessive risk-taking and lack of transparency of the venture capital system became more pronounced, the US regulatory authorities began to adjust rules on venture capital.In 2011, the SEC issued rules requiring venture capital funds to meet certain requirements, further tightening regulation of the venture capital system. In recent years, the speculation and pro-cyclical behaviors in venture capital investment became a topic of academic research.
The ongoing fourth industrial revolution is presenting historic opportunities for the financial industry. The integrated innovation of financial industry made possible by financial tecnology will become a feature of the fourth financial revolution. China is among the leading countries in financial technology development. We should learn from the past experience, and seek to balance development and security. With the progress of financial technology, the banking system, capital markets, venture capital system, and financial technology firms work together to support the real economy. At the same time, there should be measures to manage financial risks, to establish a dynamic and balanced financial regulatory system that is compatible with innovations in financial technology. Such a system will guide financial institutions to stick to the proper way and make innovation under the precondition of serving the real economy and complying with regulatory requirements, prevent disorderly capital expansion, and prevent systemic risks.

The global economy is facing increasing uncertainty, and the financial market is becoming more fragile. China's macro-economy is also facing problems such as economic structural adjustment and financial risk agglomeration, which make the relationship between monetary policy and macro-economy more challenging. The gradual reform of Chinese interest rate marketization and the rapid development of Fintech are also leading to a complex financial big data environment in terms of monetary policy. To understand the dynamic behavior of the monetary policy transmission mechanism, the available macroeconomic and financial market big data information must be utilized. Effectively analyzing the monetary policy mechanism through big data is thus a critical problem.
The transmission mechanism for monetary policies attracts extensive research attention. Some believe that the credit (quantitative) transmission mechanism is the main factor, while others suggest that the interest rate mechanism is more effective. Monetary policies typically exhibit time-varying features due to the business cycle, and thus a time-varying parameter vector autoregression (TVP-VAR) model is proposed to capture the behavior of monetary policies. The factor-augmented VAR (FAVAR) model is also used to analyze monetary policy, as it effectively utilizes real economic data.
The traditional TVP-FAVAR model uses only the same frequency data. However, the frequency of macroeconomic data is completely different from that of financial market data. Mixed frequency data are therefore widespread in actual economic activities. Effectively using such data to construct a TVP-FAVAR model and then analyze the monetary policy behavioral mechanism is therefore the challenge we face, and the aim of this study.
We propose a mixed frequency TVP-FAVAR (MF-TVP-FAVAR) model. We collect Chinese mixed frequency big data for our empirical study. The main advantage of the MF-TVP-FAVAR model is that it maximizes the integration of high-frequency financial market information and low-frequency macroeconomic information, and effectively extracts unobservable potential factors from a large amount of information. These advantages help us to more accurately analyze the time-varying relationships of monetary policy, macro indicators, and financial market indicators.
The mixed frequency data are mainly derived from China's quarterly and monthly macro data, and monthly financial data are also included. The sample period is from January 1997 to December 2017. The data sources are the National Bureau of Statistics and the WIND database.
The main conclusions of this paper are as follows. First, based on the MF-TVP-FAVAR model, the Financial Condition Index (FCI) extracted from financial market big data can better establish the dynamics of China's financial situation. This index is a leading indicator that can be used to measure economic performance, and an auxiliary indicator of the intermediary target of monetary policy. The FCI has a significant positive impact on interest rates and money supply, and this impact shows time-varying features.
Second, based on the time-varying response function of monetary policy shocks, the MF-TVP-FAVAR model captures the time-varying features of the impact of monetary policy at a macroeconomic level. This impact can be identified through the monthly observation frequency, which significantly improves the timeliness of the monetary policy transmission mechanism. Unlike the money supply, the impact of interest rate transmission on output shows a lag effect. Interest rate transmission has become smoother with interest rate marketization, while the credit transmission mechanism is increasingly blocked by fiscal policy coordination.
Finally, the business cycle has a significant impact on the transmission mechanism of monetary policy. We find that both the output effect and the price effect of this mechanism are more fluent during an economic boom than in a recession. Thus, monetary policy transmission is obviously cyclical. However, compared with price-based monetary policies, quantitative monetary policies are more susceptible to the impact of the business cycle.

Since the Housing System Reform in 1998, China has experienced a sharp rise in house prices. Although rising house prices have brought a large amount of social funds and bank loans to the real estate sector, they have also prompted local governments to use land reserves to borrow large-scale loans from banks, resulting in a high level of local government debt. As house prices are strongly correlated with land prices, which are also strongly connected to the solvency of local governments, inadequate regulation of house prices is likely to trigger debt risk for local governments (Mao and Cao, 2019). This leads to two questions: can house price regulation direct funds to the manufacturing sector？ What is the link between house price regulation and local government debt risk？
By identifying the stylized facts of China's macroeconomy, we find that under the current financing mode of local governments, local government revenue depends heavily on “land finance”. Controlling house prices will reduce land prices, which in turn will affect the solvency of local governments. When local governments are unable to repay their debt or when the central government is unwilling to bail them out, local governments may default, which will have a serious negative impact on the economy through the financial system. Based on these facts, this paper builds a multi-sector DSGE model. To characterize the relationship among house prices, land finance, and local government debt, we incorporate local governments and their land finance behavior into the model. In addition, to characterize the impact of local government borrowing behavior on the financial sector, following Iacoviello (2015) and Bernanke et al. (1999), we introduce financial frictions.
The results of numerical simulations show that controlling house prices leads to a decline in land prices, which directly affects the ability of local governments to repay their debt. If the decline in land prices does not trigger local government debt default, it will have two effects: first, the decline in land prices will lead to a decline in local government revenue, which will affect local government expenditures, resulting in a decline in output in the infrastructure sector and in total output; second, the decline in local governments' mortgage lending caused by the decrease in land prices will lead to a decline in the deposit and loan premiums of the financial sector and a reduction in the cost of other sectors to obtain loans from the financial sector. This will be further amplified through the financial accelerator effect, leading to increased investment and output expansion in non-infrastructure sectors. However, if the decline in land prices triggers local government debt default, that is, local governments are unable to repay loans obtained from the financial sector and the central government is unwilling to bail them out, then default will result in a loss of assets in the financial sector. This will lead financial intermediaries to reduce loans and sharply increase their deposit and loan premiums, resulting in a sharp increase in the cost of all sectors of the economy to obtain funds, amplified by financial accelerators, and ultimately resulting in a sharp drop in investment and output in all sectors of the economy.
Further counterfactual policy analysis shows that to avoid local government default, we should use fiscal funds to supplement bank capital or reduce bank reserve ratios to reduce the deposit and loan premiums of financial intermediaries. In this way, we can avoid local government default and reduce the cost of financing in the whole economy, which will ultimately minimize the negative economic impact of house price regulation.
Compared with previous research, this article makes the following contributions. First, the problem of local government debt has always been a major concern in house price regulation. However, existing studies are mostly qualitative and not systemic. In this regard, this article builds a multi-sectoral DSGE model to describe how house prices affect local government debt and examines the key factors that determine the relationship between the two. Second, most studies of the effect of house price regulation on economic fluctuations are primarily qualitative. This article is the first to construct a multi-sector DSGE model to identify the channels through which house price regulation affects economic fluctuations from a general equilibrium perspective, and examines the role of various factors in this relationship. Finally, the question of how to stabilize house prices and direct funds to the manufacturing sector without triggering local government debt default remains unclear. By clarifying relevant ideas through model analysis, this article attempts to answer this question and offers relevant policy suggestions.

With the continuous deepening of the population ageing in China in recent years, the shortage of the Employees' Basic Pension Fund has become increasingly severe and the downward pressure on economic growth has become more significant. The “system concept” put forward by the fifth plenary session of the 19th Central Committee of the Communist Party of China calls for the strengthen of overall planning.As stable and rapid economic growth is essential for pension system's sustainable operation, it is important to discuss about the pension fund gap issue under the framework of economic growth.
This paper constructs an overlapping generations model that includes fiscal expenditure and public debt to examine the impact of population ageing on economic growth, and compares the methods of pension fund gap compensation in promoting economic growth. Our analyses reveal that: (i) if fiscal subsidies are used to compensate for the pension fund gap, both the raised survival probability and the declined fertility will increase economic growth; (ii) if public debts or a combination of fiscal subsidies and public debts are used to compensate for the pension fund gap, the above conclusion holds when the output elasticity of human capital is small, but the effect of the raised survival probability on economic growth follows an inverted U-shape pattern and the effect of the declined fertility on economic growth is positive when the elasticity is large; (iii) the way to compensate for the pension fund gap is an essential institutional factor for economic growth.
This paper has three main contributions. First, in terms of research ideas, this paper uses the pension fund gap as the breakthrough point to achieve an organic combination of population ageing, pension fund gap compensation methods, and economic growth, and clarifies the influencing mechanism of population ageing and pension fund gap compensation methods on economic growth. Second, in terms of model construction, this paper comprehensively considers the substitution effect of the compensation for pension fund gap on productive public expenditures and private material capital, and discusses several core issues of the overlapping generations model, such as the stability, dynamic effectiveness, and debt sustainability of the economic equilibrium. Third, in terms of research conclusions, this paper depicts the evolution characteristics of population ageing and economic growth under different pension fund gap compensation methods, and puts forward methods that are most conducive to promoting economic growth under different conditions.
Based on the above conclusions, this paper draws three policy implications. First, at the conceptual level, it should be recognized that population ageing is an issue with both challenges and opportunities, which needs to be addressed with a positive attitude. Second, at the institutional level, the institutional exploration and policy reserve of pension fund gap compensation methods should be done well under the guidance of the “system concept” and in combination with the specific national conditions. Considering that the leading force of China's economic growth is still the material capital, and the output elasticity of the human capital is relatively small, exploring ways to compensate for the pension fund gap, including issuing public debts, will better optimize the long-term development path of the economy and society, and realize a good interaction between the pension system and economic growth. Third, at the technical level, the combination of policy tools to compensate for the pension fund gap should be determined dynamically based on quantification to improve the efficiency of national governance. In particular, the government should adopt more active debt management policies when issuing public debts to avoid the decline in economic stability caused by the expansion of debt scale, so as to achieve steady and rapid economic growth.
This paper constructs a theoretical analysis framework of the relationship between population ageing, pension fund gap compensation methods, and economic growth. Future research can be expanded from at least two aspects. First, considering that children's support is still an essential part of old-age support in China, the mechanism of “raising children for old-age support” can be introduced in future studies to better depict the motivation of individuals to invest in human capital. Second, the expansion of the debt scale weakens economic stability, which puts forward higher requirements for the debt management ability of the government. How to regulate the debt scale to achieve a smooth transition of the economy between different equilibriums is a key issue to be solved urgently.

Tax competition has in recent years resulted in lower tax rates worldwide. Promoting corporate investment and economic development has been the key target of the large-scale tax cuts in China's tax reform policies. The reduction of value-added tax and inclusive tax cuts for small enterprises are expected to reduce the tax burden and promote investment. However, the effectiveness of the tax reduction policy has been debated and the responses of some firms do no reflect the reduction in tax. Private investment has not increased significantly since the implementation of the tax reduction policy. Does the tax reduction policy then reduce the burden on firms？ How do such policies affect corporate investment？ What factors restrict the effectiveness of tax reduction policies？ By addressing these questions we can better understand the actual effects of tax reduction policies, and thus tax reduction reforms can be further improved.
The tax reduction policies of China's central government often result in fiscal reductions for local governments under the tax sharing system. The financial stress faced by local governments from the implementation of tax reduction policies prompts us to investigate how they can strategically respond to tax reduction shocks. Non-tax fiscal revenue is essential for local governments, which they have the autonomy to collect and manage. However, the tax reduction policies implemented by the central government can reduce local tax revenues. To ensure a fiscal balance, local governments can better enforce the collection of non-tax revenues, which leads to an increase in the non-tax burden of enterprises, and the effect of “tax-fee substitution” in local fiscal revenues and corporate expenses, which eventually hinders the effectiveness of tax reduction policies.
Value-added tax is the main type of shared tax in China. When first established, value-added tax could not be deducted from the fixed assets purchased before tax, which significantly increases a firm's financial burden. In 2004, China began to pilot value-added tax transformation in its northeastern regions. This policy allows firms to deduct value-added tax from fixed assets purchased by enterprises before taxation, thus reducing the tax burden. We investigate the effect of the value-added tax reform implemented nationwide in 2009 based on prefectural city-level panel data from 2008 to 2011. The main findings are as follows. (1) The reform has greater and more adverse effects on regions that rely more on value-added taxes. (2) These regions increase non-tax revenues relative to others, and thus the value-added tax reform leads to fee-tax substitution.
In addition, based on 2008-2011 firm-level data from the national tax survey database, we use a difference-in-differences (DID) method to evaluate the impact of VAT transformation on firms' non-tax burden. We find that although the reform reduces tax burdens, it significantly increases corporate non-tax burdens. The effects of the reform on the reduction in tax for firms are not significantly different. However, the effects on the non-tax burden differ with the types and sizes of firms. Raising the non-tax burden mainly affects small, very small, and private firms. it has no significant effect on large and medium-sized firms and non-private firms. Thus, the tax and fee substitution are asymmetric. The fiscal pressure caused by tax cuts for local governments is mainly transferred to small businesses and private firms through an increase in the non-tax burden.
Tax and fee substitution will affect government fiscal revenue quality and corporate fixed asset investment behavior. Compared with taxation, local governments have greater autonomy in terms of non-tax items, and the resulting non-tax burden is much more uncertain for firms. The substitution effect of tax and fees resulting from the tax reduction policy increases the uncertainty of tax and fees for firms, prompting them to adopt more cautious investment strategies.
In the context of recent global tax cuts, we emphasize that the central government should fully consider the financial pressure that the reduction of the shared tax policy places on local governments. The fees they incur should also be reduced in the policy, along with taxes for small and very small firms. Regulating local governments' non-tax revenue collection from small and very small firms and gradually creating a central government tax and fee management process are both necessary to prevent tax reductions. Local governments have increased the non-tax collection from small and very small firms and its management, thus leading to increased uncertainty in the tax burden of small and micro enterprises, which ultimately adversely affects their development.

Since 2013, China's central bank has greatly enriched its monetary policy toolbox and innovatively launched several policy tools such as short-term liquidity operations (SLO), standing lending facility (SLF), medium-term lending facility (MLF) and targeted medium-term lending facility (TMLF). Through such monetary policy tools, the central bank provides different maturities to commercial banks by means of pledge. With the development of the new monetary policy, there are more and more discussions on various policy tools. However, as a part of the new monetary policy, the collateral framework of the central bank still lacks sufficient research. In June 2018, the People's Bank of China gave priority to accepting green bonds and green loans as collateral, reflecting the intention of China's monetary policy to channel more funds into the green sector. Whether the central bank's inclusion of green credit assets into the qualified collateral framework can further improve the financing level of green credit enterprises and reduce their financing cost requires further research.
Based on existing studies, we believe that the collateral framework of the central bank may act on both the balance sheet of commercial banks and the balance sheet of characteristic enterprises. On the one hand, the collateral policy of the central bank means that when the central bank issues base money through MLF, it requires commercial banks to provide qualified collateral such as green credit assets, so as to bypass the transmission from the liability end of commercial banks to the asset end. On the other hand, the central bank's inclusion of a certain type of credit and financial assets into the qualified collateral framework will improve the pledge right and scarcity of such assets (Nyborg, 2017), which is equivalent to the central bank's indirect “guarantee” for characteristic enterprises through national credit.
Specifically, this paper selects the quarterly financial data of A-share listed companies in the China Stock Market & Accounting Research (CSMAR)database from the first quarter of 2013 to the fourth quarter of 2019, and excludes financial companies and companies that have issued green bonds during this period. Using difference-in-differences (DID) method, we compare the different effects of the central bank's collateral expansion policy on the enterprises in the experimental group and the control group to identify a causal relationship. The main target of the collateral expansion policy is the enterprises that can obtain green credit, but there is no clear industry standard. Therefore, identifying the experimental group and the control group only by industries may underestimate the effect of the policy and ignore the impact of green credit on ordinary enterprises with energy conservation and environmental protection projects. Therefore, to more accurately determine the target subjects affected by the policy, we analyze the annual reports of listed companies through text analysis method, and manually classify companies with green projects into the experimental group and companies without green projects into the control groupbased on the description of green projects in the “Green Credit Statistical Statement” issued by China Banking Regulatory Commission in 2013.
This study finds that the expansion of qualified collateral by the central bank of China improves the financing availability of green credit enterprises, and extends their loan maturity structure, and the financing availability effect is more significant for private enterprises. In addition, the expansion of qualified collateral reduces the financing cost of green credit enterprises, and this effect mainly exists in state-owned enterprises. Moreover, the effects of the expansion policy are heterogenous across industries. In the green industry, the policy effect is mainly on the financing availability, while in the pollution industry, the policy effect is mainly on the financing cost. The above conclusions indicate that the central bank should further improve the system of eligible collateral framework, attach great importance to the collateral framework for bank financing constraints and credit preference regulation, and give full play to the eligible collateral in its directional support for the green resource allocation function of the financial system.
This paper mainly focuses on the green financial effect of the monetary policy—the expansion of the collateral framework—in China. Whether this new monetary policy can be transmitted to the green production level needs further analysis. The relationship between the new monetary policy and green development still needs to be explored.

The five largest state-owned commercial banks dominated China's banking market before 2006, with more than 65% of the total lending business. This market was strictly regulated, and joint equity banks and local commercial banks were hard to establish branches outside the headquarter locations. Since the deregulations of 2006 and 2009, the China Banking Regulatory Commission has gradually relaxed the entry barriers for banks. The market share of joint equity banks and local commercial banks in lending thus increased from 13.10% in 2005 to 32.80% in 2017, and the proportion of their branches increased from 22.56% in 2005 to 41.87% in 2017. Bank deregulation also has major effects on the geographical distribution of branches, encouraging competition and enhancing banks' ability to support economic development.
Previous research demonstrates that competition significantly enhances the ability of firms to obtain loans from banks and the efficiency of credit resource allocation. Due to the dominant role of the bank sector in China's financial system, bank loans are the most important source of the capital that fuels firm investment and local economic growth. Statistics from the People's Bank of China indicate that bank loans accounted for 71.19% of the social financing increment in 2017. Thus, changes in the geographical distribution of bank branches and the level of competition will have a major impact on firm investment and subsequent economic performance.
In this paper, we use the number of bank branches within a certain radius (i.e., 5, 10, or 20 km) around firms to measure the level of bank competition based on the address information of banks and firm headquarters. Using Chinese Industry Census data from 2001 to 2012, we investigate how changes in the geographical distribution and competition of banks affect firm investment and investment efficiency, and find that the number of bank branches around firm has a significantly positive effect. These findings are robust to a series of alternative empirical designs, such as changing the measures of bank competition ,firm investment and investment efficiency, controlling for regional economic heterogeneity and potential reverse causality, and using the deregulation in 2009 as an exogenous shock. We also find that the positive impact of bank competition on investment efficiency is greater for a sample of underinvested and non-state-owned firms. Bank competition is also found to improve firms' investment efficiency, mainly by alleviating financial constraints and reducing agency conflicts.
This study makes various contributions to the literature. First, although research considers the relationship between bank competition and firms' ability to obtain loans from banks, few studies focus on the effect of bank competition on how firms utilize bank loans and their investment efficiency. Second, instead of the traditional bank competition indicators (i.e., concentration ratios or the number of banks in specific regions), we use the number of branches around a firm to evaluate its bank competition environment, which can effectively address the heterogeneity in competition faced by different firms in the same region. Third, although the influence of geographical distribution on macro-economic growth and bank performance is empirically investigated, few studies address the effect on micro-firms. Thus, we contribute to the literature by investigating the impact of bank branch geographical distribution on firm investment and investment efficiency using a large-scale micro sample.
Our work also has important policy implications. China is attempting to develop a market-oriented banking system with more accessible, more affordable, and higher-quality financial services. We find that the increase in bank branch coverage and bank competition has a positive impact on firm investment and investment efficiency. These findings provide empirical support for the marketization reform of China's banking industry and the development of inclusive finance. When conducting supply-side structural reform in the financial sector, China should continue to strengthen market mechanisms and institutions in the banking industry and facilitate high-quality development through market competition.

Targeted poverty alleviation is a national strategy and an innovative form of poverty alleviation proposed according to China's special national conditions. Enterprises' participation in targeted poverty alleviation can not only give full play to the inherent advantages of industrial poverty alleviation and implement “blood-creating” poverty alleviation, but also obtain a larger platform for creating value. Therefore, the targeted poverty alleviation by corporate is an important part of winning the battle against poverty, and also becomes a new form for corporate to fulfill their social responsibility. Then, does the capital market pay attention to the targeted poverty alleviation actions of listed companies？ Does the participation of corporate in targeted poverty alleviation affect corporate risk？
The research on the relationship between corporate social responsibility and corporate risk has formed two competing views: the risk reduction hypothesis and the risk increase hypothesis. Regarding the hypothesis of increased risk, neoclassical economics believes that corporate social responsibility has deviated from the goal of maximizing shareholder value. Under the condition of limited corporate cash flow, overtaking of social responsibilities will occupy corporate resources, which may result in companies having to reduce strategic investments such as R&D investment and long-term investment, weakening corporate competitiveness, reducing corporate value, and increasing corporate risk. According to principal-agent theory, managers tend to be opportunistic, and their active fulfillment of social responsibilities may be social activities that have nothing to do with the development of enterprises in order to improve their personal reputation and social influence. Wasting the limited resources of an enterprise on social activities unrelated to the creation of shareholder value will weaken the competitiveness of the enterprise and increase its risk. For self-interested motives, managers may use social responsibility tools to divert negative news and cover up the problems in the business performance of enterprises, so that enterprises perform social responsibility only has “tool characteristics” rather than “value-creating characteristics”. Therefore, it is ultimately an empirical question that this study aims to address.
In order to answer these questions, this paper downloaded from the CSMAR database the non-financial listed companies that participated in targeted poverty alleviation in China's A-share market in 2016-2018 as a sample to empirically study the impact of targeted poverty alleviation on corporate risk. The empirical research conclusions of this paper mainly include the following points. First, the targeted poverty alleviation action is significantly negatively correlated with the equity market risk. Second, the lower the corporate information transparency, the stronger the effect of targeted poverty alleviation on the risk reduction of the stock market, indicating that the lower the transparency of corporate information, the stronger the “information communication” role of the targeted poverty alleviation actions of enterprises; Third, in regions where the institutional environment is weaker, the targeted poverty alleviation behavior of companies has a stronger effect on reducing equity market risk. This shows that in areas where the institutional environment is relatively weak, the government allocates a greater proportion of economic resources.
The main contributions of this paper are as follows: Firstly, this paper studies the impact of corporate social responsibility on corporate risk from the perspective of targeted poverty alleviation, enriching the research scope of corporate social responsibility and corporate risk. Secondly, based on the perspective of equity market risk, this article finds that investors pay attention to the targeted poverty alleviation behavior of enterprises and can identify the strategic significance of targeted poverty alleviation by enterprises. Finally, the conclusions of this article have important policy significance. This article explores the mechanism of the enterprise's targeted poverty alleviation affecting enterprise risk from the perspectives of reputation effect, resource effect and information effect.

Financial leasing has been developing rapidly and become one of the closest financial forces connected with the real economy in the context of new economic normal. It provides a possibility for private capital to flow into formal financing channels. It also provides financing opportunities for private enterprises and small and medium-sized enterprises, and makes up for the lack of state-owned banks' financing functions. As financial leasing and bank credit are equally important financing channels, their relationship and whether financial leasing can serve as an effective alternative to traditional financing channels to promote corporate investment are worthy of in-depth consideration. These issues are also very important for improving financing channels' ability to accurately serve the real economy, establishing a multi-level market system, ensuring stability on the six fronts and securiry in the six areas.
Domestic and foreign literature on the relationship between financial leasing and bank credit is mainly based on two theories: the debt replacement theory (Myers et al., 1976) and the complementary theory (Lewis and Schallheim, 1992). However, more than 90% transactions in China's current leasing market are financial leasing, of which sale-and-leaseback transactions account for a large proportion, reaching as high as 83.9% in 2015. Operating leasing transactions account for only 12.5%. Therefore, it is difficult to apply the complementary theoretical mechanism in China based on the current development of leasing industry and the characteristics of taxation arrangements. In this paper, we manually collect the financial leasing data from the annual reports of all A-share listed companies in China's Shanghai and Shenzhen stock exchanges during 2004 to 2016 for empirical testing. The results show that both financial leasing and bank credit can significantly increase company's investment rate, and financial leasing has a significant substitution effect on bank credit. Since financing constraints play a very important role, we select corporate asset tangibility, asset-liability ratio and corporate ownership as indicators to explore the role they play in the substitution relationship. We find that tighter financing constraints are associated with greater substitution effect of financial leasing on bank credit.
Our study contributes to the literature in the following three aspects. First, most domestic research on financial leasing focuses on macro-level analyses, while there are relatively few micro-level studies (Shi and Xu, 2013). We empirically examine the substitution effect of financial leasing on bank credit from the enterprise level and provide micro evidence for the impact of financial leasing on economic growth, which enriches and expands the research scope of financial leasing. Second, existing research mostly discusses the quantitative change relationship between financial leasing and bank credit (Deloof and Verschueren, 1999; Lin et al, 2013), but this quantitative change may be affected by common factors such as corporate asset structure, etc., which may lead to endogenous problems and estimation biases. Moreover, the quantitative analyses cannot reflect the existence of the substitution effect. Therefore, according to the nature of substitutes in microeconomics, and based on the common characteristics of financial leasing and bank credit--their “financing” attribute as financing channels, we start from the perspective of corporate investment to test whether the substitution relationship between the two exists. Third, we analyze the impact of financing constraints on the substitution effect. The results show that for companies facing stronger financing constraints, financial leasing has a more obvious substitution effect on bank credit, which suggests that financial leasing has a comparative advantage in alleviating corporate financing constraints.
Our findings have the following policy implications. With the advantage of “integration of industry and finance”, the government should actively promote the effective use of the dual attributes of financial leasing, improve its ability to accurately serve the real economy, and provide strong financial support for the construction of a new development pattern. At the same time, in regard to the “credit-like” function of financial leasing, especially the function of sale-and-leaseback transactions, the government should actively improve the relevant policies, standardize and guide them to return to their original source, and promote the transformation of the risk prevention of leasing business from the credit of the lessee to the credit of the leased property to better prevent and resolve systemic financial risks.

Rank-and-file employees are important to the development of firms, because their engagement determines how a firm's strategy is finally executed. The incentives of non-executive employees are a major concern in both academia and practice, as non-executive employees are recognized as essential motivators of the maximization of corporate value. Thus, aligning the interests of employees with shareholders and improving their relationships have become key areas of focus in China. In June 2014, the China Securities Regulatory Commission issued its “Guiding Opinions on the Pilot Program of Employee Stock Ownership Plans for Listed Companies,” which sets out policies for supporting the pilot implementation of employee stock ownership plans (ESOPs) for listed companies. ESOPs have since become increasingly popular. However, little evidence of firms' actual motivations for adopting ESOPs has been provided.
Proposing the concept of ESOPs, Kelso and Adler (1958) argue that they can ease internal conflicts and align the interests of employees with those of shareholders, thus supporting the long-term interests of capitalism. According to social comparison theory, employee-shareholder conflict is often caused by salary competitiveness, in which employees compare their salaries with those of their counterparts outside the company. A lower level of salary competitiveness may be related to a more passive working attitude and a higher employee turnover rate, which can hinder the efficiency of a firm's productivity. Thus, is salary competitiveness a main concern in terms of employee stock ownership？ Addressing this question is important for regulators and can also enrich the ESOP-related literature.
We investigate this question using a sample of Chinese listed A-shares firms from 2006 to 2017. We control for the effects of corporate finance and corporate governance characteristics. Following studies such as those of Bova et al. (2014, 2015), we include firms adopting employee stock ownership plans or stock options/restricted stocks for non-executive employees as our observations. We collect data from the China Stock Market & Accounting Research(CSMAR) and Wind Databases, exclude financial firms and missing values, and winsorize all the continuous data at the 1% and 99% levels. To calculate the salary competitiveness index, at least three observations are required in the same industry.
Our empirical evidence indicates that the weaker a firm's level of employee salary competitiveness is, the more likely it will be that the firm adopts ESOPs. Our conclusions remain unchanged after conducting a series of robustness tests and considering any potential endogenous problems. We also find that the less competitive employee salary is, the more attention will be paid to maintaining the stability of the ESOPs, including demanding a longer locking period, covering more non-executive employees, and offering more shares to rank-and-file employees. We further document that the negative relation between employee salary competitiveness and the adoption of ESOPs is only significant in firms with more employee turnover pressure, higher human resource costs, and more severe financial constraints. In general, we find that adopting ESOPs is the most realistic choice for Chinese firms, as it makes up for less competitive salaries when facing the challenges of external labor mobility and internal human resource costs and capital constraints.
This study makes several contributions. First, our research provides new insights into why ESOPs are adopted, from the perspective of employee salary competitiveness. Our results show that firms use ESOPs to make up for less competitive employee salaries, and thus support regulators' original aims of promoting ESOPs. Second, our empirical evidence can bring some enlightment to the relevant regulatory authorities about improving the design of ESOPs to help protect employee interests. Our conclusions also provide regulators with methods of optimizing the ESOP policy environment and can help firms to create harmonious environments for their internal employees. Third, we enrich the literature related to ESOPs, employee salaries, and income distribution.

In recent years, controlling shareholders have increased their holdings of the company's stocks. Most controlling shareholders claim that they increased their shares because they are confident in the company's trajectory and optimistic about its future prospects. However, studies have found that many controlling shareholders increased their holdings following an equity pledge. Why are controlling shareholders keen to increase their holdings after an equity pledge？ Do holdings under different backgrounds send different signals？ How does the market interpret the signals？
Traditional signal theory claims that an increase in the controlling shareholders' holdings transmits signals about the company's fundamentals and future development. Rational investors will use the signal to judge the company's value. They will believe that the current stock price deviates from the intrinsic value, which is considered the signal transmission effect. According to behavioral finance studies, investors have bounded rationality: their decision-making process has reference point dependence and representative deviation. A traditional signal transmission becomes a behavioral signal when the investor habituates the traditional signal. The behavioral signal is essentially a signal, but it does not reflect the company's fundamentals. Rather, it influences the investor's decision-making through their judgment of behavioral habits, resulting in the signal transmission effect. This paper argues that the increase in holdings under equity pledge is a behavioral signal, and the controlling shareholders have a motive to use the behavioral signal effect from an increase in holdings to stabilize the stock price, thus mitigating the risk of the equity pledge.
This study empirically tests a sample of A-share listed companies from 2008 to 2017 and finds that controlling shareholders are more inclined to increase shareholdings under an equity pledge. Their inclination strengthens with the increase in pledge rate, indicating that the controlling shareholder's increase in holdings is an attempt to alleviate liquidation pressure and prevent the transfer of control.In the short term, there is no significant difference in the degree of positive market reaction between the non-pledged group and the pledged group. In the long run, the long-term stock price and the pledged group's operating performance after the increase in holdings are weaker than the control group. The non-pledged group is better than the control group, indicating that the increase in holdings under the pledge of equity is not a value signal but a behavioral signal. Further analysis reveals that the positive effect of the equity pledge on the increase in holdings is more pronounced in companies with high liquidation pressure, low-quality companies, and underdeveloped areas with loose regulatory environments. This finding proves that controlling shareholders increase their holdings under an equity pledge to alleviate liquidation pressure. Expansion tests show that a controlling shareholder under an equity pledge is more inclined to net increase in holdings after considering the impact of a reduction in shareholding. It also shows that management and other major shareholders cater to the controlling shareholder's increase in holdings. Finally, this article excludes the hypothesis of value underestimation, the hypothesis of political motivation, the hypothesis of enhanced control, and the hypothesis of overconfidence as alternative explanations.
This study makes three main contributions to the literature. First, this article deepens the research in the field of equity pledge. It connects the equity pledge with controlling shareholders and insider transactions and finds that the controlling shareholder under the equity pledge is motivated to alleviate the risk of a control transfer by increasing their holding. It also expands the perspective of equity pledge research. Second, this article provides new evidence from China for behavioral corporate finance research. From the perspective of behavioral signals, this article finds that the controlling shareholder's behavior is an attempt to leveragethe representative deviation of investor psychology. By sending behavioral signals, the stock price will rise in the short term, alleviating the risk of control transfer. Third, this article's conclusions have some policy implications. For the regulatory authorities, it is necessary to further improve the shareholder increase system and the equity pledge information disclosure system, and strengthen the supervision of controlling shareholder increases under equity pledges.