Climate change is becoming an important threat to the world. Should monetary policy take a more proactive stance and promote the transition to carbon neutrality？ Controversy remains in academic and policy circles on this issue. In this paper, we propose that it is necessary to include carbon neutrality goals in normalized structural monetary for three reasons. First, the transition to carbon neutrality affects existing monetary policy frameworks. Second, carbon emissions have negative externalities. Third, a single fiscal policy cannot effectively promote the transition to carbon neutrality.
The central bank can correct market failures through macro and structural monetary policies, and can facilitate financial markets to allocate more resources to green sectors. When there is a huge difference between the private and social benefits of commercial bank lending, restricting the flow of credit has social benefits. In practice, using structural monetary policy to facilitate the transition to carbon neutrality may have advantages over using fiscal policy. Structural monetary policy mainly acts between the central bank and financial institutions,changes the incentive compatibility condition of financial institutions and promotes the credit allocation to specific industries; it also utilizes the professional advantages of financial institutions in information collection, monitoring, and risk diversification and avoids the potential for bias in some fiscal policies. However, there are still three major challenges to construct a structural monetary policy consistent with carbon neutrality.
The first challenge is determining the theoretical framework for an active structural monetary policy consistent with carbon neutrality. The second challenge is establishing the goals, mediating variables, and transmission mechanisms for an active structural monetary policy that is consistent with carbon neutrality. The final challenge is balancing carbon neutrality goals and other central bank goals. Carbon neutrality goals may conflict with other policy objectives such as maintaining financial stability.
We propose three policy recommendations to build a structural monetary policy that is consistent with the transition to carbon neutrality. First, central banks can establish a structural monetary policy model that is compatible with the transition to carbon neutrality. Central banks can strengthen the monitoring of energy (oil, coal, new energy, etc.), agricultural products, and carbon prices, and can study the impact of changes in energy supply and prices on overall prices. Structural output and consumption changes can be added to these models. Joint research can also be conducted on the macroeconomic impact of monetary policy and carbon-neutral transition policies such as carbon tax, carbon subsidy, and carbon price in a structural monetary policy model. Second, central banks can study the transmission mechanism of monetary policy in the presence of the transition to carbon neutrality. The People's Bank of China has established a short-term interest rate corridor with the standing lending facility (SLF) interest rate as the upper limit, the excess reserve interest rate as the lower limit, and the medium-term lending facility (MLF) interest rate as the medium-term policy interest rate, and has established a loan market from the MLF interest rate to the loan market. It is necessary to study the impact of the carbon price and carbon risk on interest rate transmission upon obtaining the necessary information on the carbon price and carbon risk. The mediating variables and goals of the carbon-neutral structural monetary policy are established. Third, central banks can establish and extend structural quantitative policy tools, including a green quantitative monetary policy framework covering the deposit reserve ratio, liquidity adjustment tools, and non-financial sector credit tools to fully support the low-carbon transition, improve the collateral framework management in the re-lending policy, expand the green collateral framework, create new re-lending facilities, and use the “window guidelines” to provide financing support for carbon-neutral emerging industries.
The People's Bank of China has always been a practitioner of structural monetary policy, and it already leads the research on structural monetary policy consistent with carbon neutrality. It is necessary to continue to focus on these important issues, such as how to optimally structure the central bank's monetary policy, how to balance the relationship between structured policy objectives and conventional objectives, how to balance the relationship between structured monetary policy and government-related functions, and to determine the roles of and relationship between structural monetary policy and markets. Based on the rich practices and continuing theoretical discussions, the People's Bank of China is expected to be at the forefront of the world in innovating structural monetary policy in accordance with the transition to carbon neutrality.

China has already established a relatively comprehensive market-oriented interest rate system. The central bank releases monetary policy signals in its short-term open market operations interest rate and medium-term lending facility interest rate to guide market benchmark interest rate the Treasury bond yield curve. Interest rate liberalization has improved the term structure of interest rate formation, which indirectly affects the transmission of central bank-set interest rates to the bond market. Under China's open market operation, bonds are the facility with which the market adjusts liquidity according to the macroeconomic situation, and thereby guides the expected changes in market interest rates. It is essential to study the effectiveness of the transmission of short-term open market operations interest rates to the medium-and long-term bond yield curve.
In this paper, we summarize data from the second half of 2009 to the end of 2019, and divides this sample into two stages:In the former stage(2009.7-2014.12), open market operations were dominated by an alternation between forward and reverse repurchases.The latter stage(2015.1-2019.12) was dominated by reverse repurchase operations as the open market operation model was being regularized;and the relationship of treasury bond yields and open market interest rates is affected by macro circumstance. The key to explaining the above facts lies in analyzing the transmission of open market policy interest rates to the yield curve, understanding the relationship between open market operation and the behavior of the interest rate term structure, and exploring whether the mechanism governing this relationship changes with the business cycle.
There are mang researches on the impact of monetary policy on the bond yield curve (and the term structure factor) but few research on the impact of open market operation policies on the term structure of interest rates. Overseas studies find that monetary policy is the key link between the term structure of interest rates and the macroeconomy. Domestic scholars have different opinion on whether monetary policy can effectively adjust the term structure of interest rates. Some call for a single policy tool for open market operation, as they argue that the open market acts on the Treasury bond yield curve via liquidity effects and expected effects, and transmits short-term interest rates to long-term interest rates. In addition, the term structure of interest rates is a forward-looking economic indicator and thus contains abundant monetary policy information. However, studies do not focus on the transmission of open market operating interest rates to the yield curve under the theoretical framework of the term structure of interest rates.Further more they do not discuss the scenario of mixed-frequency data. Most studies also ignore the impact of structural changes, such as the economic policy cycle, on the transmission of monetary policy.
The main research conclusions of this study are as follows. First, under the condition of mixed-frequency data, the introduction of open market interest rate information significantly improves the fitting of the interest rate term structure factor and of the yield curve in each period of Treasury bonds.
Second, the transmission efficiency of short-term open market policy interest rates to the yield curve is low, and there is an asymmetric relation between open market operation policies and the term structure of interest rates. On the one hand, during the immature period of China's bond market, market were unable to form sufficient policy expectations for open market operations, resulting in a lag response in the transmission of policy changes to the yield curve. On the other hand, the level factor and the slope factor have a positive impact on the open market operation policy. It indicates that the macroeconomic forward-looking information contained in the rate term structure (especially the slope factor) is an important reference for the central bank.
Finally, with the gradual improvement of the monetary policy communication mechanism, the central bank's ability to guide and manage market expectations has been significantly improved. Moreover, the transmission channel from the open market interest rate to the yield curve has been effectively dredged, and the effect of open market interest rates on the term structure factors(especially the slope factor) has become increasingly prominent.

The natural interest rate is an important concept in macroeconomics and finance, as it provides a benchmark for calibrating the stance of monetary policy. It also affects the price of financial assets and the allocation of large categories of assets by affecting the discount rate in the financial market. However, the natural interest rate is unobservable and is thus estimated in the macroeconomic literature and the financial literature using various methods. An implicit assumption of the finance-based approach is that the financial market is efficient . This implies that additional economic and financial information is needed to jointly predict future trends in interest rates and estimate the natural interest rate. Macro-based estimates of the natural interest rate are heavily dependent on the assumptions of the models used, which often omit important variables. The discrepancy between the natural interest rate estimated using financial methods and that estimated using macroeconomic methods is termed the “natural interest rate puzzle.” This study finds key evidence for such a discrepancy in China and this discrepancy could lead to disturbances in the formulation of monetary policy, which requires a more accurate estimate of the natural interest rate than those that are currently used.
In this study, we estimate China's natural interest rate using a financial model and a macroeconomic semi-structural model, and confirm that China also faces the natural interest rate puzzle. We solve the puzzle by constructing a consistent macro-finance model that estimates the natural interest rate by utilizing both macroeconomic variables and yield curve information. The interest rate and the natural interest rate represent an important intersection of macroeconomics and finance research. Specifically, not only do the yield curve and other financial variables have an important impact on the estimation of the natural interest rate, but the accurate estimation of the natural interest rate has an important impact on asset pricing. Identifying the factors influencing bond yields and combining macroeconomics and finance factors are important trends in bond pricing research. Macro-finance theory shows that the trend of inflation and the natural interest rate are the basic determinants of the yield curve. Under the macro-finance framework, we further study the impact of the natural interest rate on bond pricing. We obtain yield data from the CCDC, and use the quarterly values of monthly year-on-year CPI data as the inflation rate. We take the first quarter of 2011 as the base period, and obtain the value of real GDP from the nominal GDP and GDP year-on-year growth rate and quarter-on-quarter growth rate, which are logarithmically processed and seasonally adjusted by X-13. The data are acquired from the Wind Economic Database and CEIC database.
The results lead to two conclusions. (1) The macro-finance model could solve China's natural interest rate puzzle, and estimates a lower natural interest rate than that estimated by the macroeconomic model. (2) The natural interest rate has a significant impact on bond yields. Adding the natural interest rate can improve the goodness-of-fit of bond yields to the yield curve across a range of maturities.
An important contribution we make in this study is to apply the framework of Brand et al. (2020) to solve a theoretical problem—the natural interest rate puzzle—and expand the application of this method by incorporating fundamental information on China's interest rate liberalization reform. We also empirically test the important role of the consistent natural interest rate that we estimate in describing the dynamics of the bond yield.

USDT is a dominant stablecoin pegging the US dollar at parity and is issued entirely against reserves mainly deposited at banks. More than two thirds of global Bitcoin transactions use USDT, which has become the infrastructure and primary medium of exchange for the crypto-assets market. The core mechanism to stabilize the intrinsic value of USDT is having the necessary reserves in place to ensure that the token is readily redeemable at parity with the US dollar. Tether, a tech company domiciled in the US, promises to meet the market demand for redeeming USDT against USD at parity at any time. However, on February 24, 2021, Tether and affiliates (Bitfinex) settled a judicial investigation with the New York attorney general's office, paying a \$ 18.5 million fine to end a judicial probe into the alleged fraudulent issuance of the stablecoin USDT, foreshadowing that USDT could have a serious liquidity impact on the \$ 1.4 trillion crypto-assets market as reported by The Economist.
In China, using USDT has become a way to bypass government regulations, which channels its risks to the foreign exchange (FX) market through the nexus between USDT and the RMB exchange rate. Nowadays, most USDT trading activities in China are conducted through OTC online trade, which provides platforms priced in RMB for buyers to bid and sellers to ask. Some recent court verdicts have shown that Bitcoin and USDT share a decentralized, borderless and hard-to-trace nature, so both of these cryptocurrencies are used for cross-border fund transfers, forming a triangular RMB-USDT-Bitcoin trading mechanism.
Accordingly, the theoretical and empirical work of this paper is twofold. First, this paper establishes a theoretical model for the triangular trading mechanism. A salient feature of USDT is its ability to act as a bridge between a fiat currency and crypto-assets priced in USD, which could be seen as a de facto black market for USD. This model predicts the inherent correlations between the price of USDT and official exchange rates, such as of CNY, which can deepen the theoretical framework for stablecoin and further reveal the financial risks brought by. An empirical model for USDT price return and volatility correlated with those of CNY is then developed to test the hypothesis based on the theoretical model.
This paper is the first to find that (a) USDT (in RMB) return is negatively correlated with CNY return, and USDT (in RMB) volatility is positively correlated with CNY volatility; and (b) USDT (in RMB) volatility is a leading indicator of CNY volatility. Moreover, the results of similar empirical models show that the correlations between EUR and JPY return/volatility and USDT (in EUR and JPY) return/volatility are in sharp contrast to the correlations between CNY and USDT (in RMB). To narrow the explanatory gap of these empirical findings, the negative correlation between USDT (in RMB) and CNY can be explained by our theoretical model, which shows that increasing the probability of successful AML/CFT monitoring and capital outflow control would lower the equilibrium ratio of the USDT price to the official exchange rate, with the former price decreasing (RMB appreciation) and the latter price increasing (RMB devaluation) in tandem.
This paper also contributes to the theoretical framework for FX black markets in the digital era, as it finds that a weak currency exhibits different correlational relationships with a stablecoin (USDT) compared to strong currencies, which would present an insidious risk to the stability of the weak currency. Hence, it can be inferred that stablecoins should be under adequate and appropriate regulation, and that global stablecoins should not be rolled out before there is a consistent and holistic framework for regulation on this issue. We advocate that because of the possibility of using a stablecoin pegged to an international or domestic currency on FX black markets, the measures surrounding crypto-assets and stablecoins implemented by the government should be upheld.

At present, China's economy is facing multiple pressures, from both domestic and abroad. Under this background, the tax reduction policy is considered to have the potential to hedge the negative impacts from domestic and abroad and to facilitate the transformation of China's growth model. Studies have paid little attention to changes in firms' debt maturity when assessing the micro-impacts of tax reduction policies at firm level, but debt maturity and the related problem of maturity mismatch are important for a firm's current and future development, which can be seen in private firms' frequent bond defaults.
The debt maturity of Chinese firms is quite short compared with the debt maturity of developed countries or the maturity of Chinese firms' assets. This paper discusses the impact of tax-reduction policies on the debt maturity of small low-profit firms. Theoretically, tax reduction imposes two opposite effects on firms' debt maturity. One effect is that firms' improved profitability will encourage banks to extend debt maturity to retain firm customers, and the other is that the increased free cash flow will exaggerate the principal-agent problem between banks and firms, thus leading to a shortened debt maturity.
Based on data from the National Tax Survey (2010-2015), we use the half-reduced enterprise income tax reform as a natural experiment. We find that after the reform of tax reduction, in general, firms' debt maturity is extended. This effect is larger for firms with either a greater increase in profit or a smaller rise in free cashflow, which reconciles with our hypothesis. To further test the principal-agent mechanism proposed in this paper, we provide evidences that firms in industries expanding rapidly, industries with overcapacity risks and industries related to the real estate sector typically experience a shortening of debt maturity after tax reduction because of a strong agency cost effect. This suggests that tax reduction policies do not necessarily extend firms' debt maturity. This paper has important policy implications for improving firms' financing structure, especially for small low-profit firms.
This paper contributes to the literature in three ways. First, when assessing the impact of tax policies on firms, the literature mainly focuses on factors such as firm's operating performances performance, employment, investment, innovation and R&D, while firms' debt maturity is rarely discussed. However, debt maturity is related to firms' operating risks at the micro level and the industrial structure and systemic risk at the macro level. Therefore, more in-depth studies are necessary. There are two main reasons that studies do not systematically establish the connection between tax reduction policy and firms' debt maturity. One is that they belong to different fields: tax reduction policy is a classic topic of fiscal economics, while firms' debt maturity is a topic in the field of corporate finance. The other is that tax reduction policy does not simply affect a firm's debt maturity by directly changing the firm's cost and gains. The analytical framework of this paper is based on the perspective of bank decision-making to investigate how banks' decisions change with the changes in firms' performances after the tax reduction.
Second, regarding the long-standing phenomenon of Chinese firms' debt maturity being too short and the related problem of maturity mismatch, previously, policy mainly focused on banks. Although banks are quite decisive in determining firms' debt maturity, the relationship between banks and firms is not necessarily invariable. Instead, it can be marginally altered by firm's performance. An implication derived from this paper is that we can work on firm's side to improve the financing structure of firms. Such an improvement can be achieved by means of, tax reduction, fee reduction, reserve requirement reduction and interest rate reduction, etc . By improving the profitability of firms and alleviating the problem of information asymmetry, firms may improve their performance and obtain more long-term loans.
Third, because tax reduction policy has two opposite effects on firms, tax cuts do not always improve firms' debt financing structure. For example, the debt maturity of enterprises with serious information asymmetry may be shortened after a tax reduction because the agency cost effect exceeds the customer competition effect. Such unexpected policy consequences have not received sufficient attention.

A stable financial inclusion system can improve a household's resilience to risk and the financial health of consumers. Digital finance is developing rapidly in China, and thus, the importance of promoting a healthy and sustainable system of digital financial inclusion is recognized. However, the issue of consumer financial health has not been fully considered in the literature. Digital finance development can encounter problems such as platform cross-credit granting and individual over-lending. We therefore investigate how digital financial inclusion can reduce households' unanticipated risks from the perspective of financial health and how it can effectively develop in China.
We first develop a theoretical model to examine how digital financial inclusion affects unexpected risk shocks. We then conduct an empirical investigation in the Chinese context using the Global Findex Database for 2014 and 2017. We find that first, digital financial inclusion can effectively enhance households' resilience to risk shocks. All groups can enjoy the dividends of digital financial development, but the less-well-off gain the most benefit. Second, we find that moderate borrowing can increase households' risk-taking, while excessive borrowing will lead to higher risk-taking, thereby reducing the available contingency when facing risk. This indicates that residents' ability to cope with risk is based on rational borrowing. We obtain data from the China Household Finance Survey and China Family Panel Studies and confirm our findings. Third, digital financial inclusion can improve households' ability to respond to risk through four channels: promoting transfer and remittance, increasing trust levels, increasing the frequency of deposits and withdrawals, and reducing transaction costs. Finally, digital financial inclusion can help households affected by the risks of steady consumption, mainly through the promotion of spending on non-durable goods.
This study provides several important policy implications. First, the development of digital financial inclusion can help households participate in the financial market and provide them with safe savings channels, and market regulators can also better manage sudden risks. China should therefore accelerate digital technology innovation and aim to fully implement digital financial inclusion. Second, borrowing behavior in the development of digital financial inclusion may become excessive, so any financial inclusion system should focus on the following. (1) Improving the financial literacy of consumers. Policymakers should conduct online financial education, ensure the protection of financial consumers' rights and interests and improve households' financial prevention capabilities. (2) The supervision mechanism of digital financial platforms should be improved by the government, which can promote innovative management and control technology. (3) The effective sharing of big data between financial technology platforms can prevent consumers' overborrowing and excessive debt.
The main contributions of this paper are as follows. First, based on our theoretical and empirical research, we reveal the impact of digital financial inclusion on the response to unexpected risk and its mechanism. Research has mainly focused on the relationship between digital financial inclusion and the demand for credit, consumption, entrepreneurial innovation, inequality, and inclusive growth. Few studies have fully considered the impact of digital financial inclusion on households' risk response. Our study therefore extends the literature in this direction. Second, we explore the consequences of multiple lending behaviors from a financial health perspective. Our empirical results show that excessive borrowing can weaken the risk-smoothing effect of digital financial inclusion. A high-quality financial inclusion system should involve consumers' financial health, and so our findings provide a new research perspective and useful policy references for the development of such a system. Third, we present micro-evidence that digital financial inclusion can help households suffering from negative shocks by stabilizing their consumption, thus providing new insights into how steady consumption can be attained through financial inclusion.

Full employment is the foundation of economic and social stability and is also the primary target of China's macroeconomic policy.China has implemented an employment priority strategy and issued a series of policies to promote employment. We discuss how local governments achieved their employment targets and the quality of urban employment.
We manually collect unemployment data published in 2,870 government work reports from 287 cities in China's 31 provincial administrative regions from 2007 to 2016. We discuss the impact of local governments' unemployment target adjustments on employment quality. This target is measured by the planned unemployment rate in the 2,870 government work reports, and employment quality is measured by the number of redundant. We find that less stringent unemployment targets reduce the number of employees being made redundant and improve employment quality. The impact of the unemployment target adjustment is asymmetrical. Firms will be more sensitive to an upward adjustment, as this will significantly reduce the number of redundant employees, but we find that a downward adjustment is not significant, indicating that the adjustment has more of an effect when the initiative is government-oriented. We also find that the impact of an unemployment target adjustment is stronger in private companies, companies with fewer subsidies, and regions with a high degree of marketization. Finally, we find that a less stringent unemployment target will also increase firms' total factor productivity and value.
Our study makes several contributions to the literature. First, we directly assess the impact of the government's unemployment target management on the quality of employment, thus extending the literature concerning the impact of government behavior on employment. Most studies focus on government behaviors that promote employment, such as credit supply, subsidies, and tax incentives. However, these measures are more of a stimulus strategy in response to unemployment; that is, they passively prevent unemployment from increasing. We expand on this by focusing on government unemployment target adjustment.
Second, we contribute to the literature on government target management by examining how local governments manage unemployment targets.This research focuses on the adjustment of unemployment targets rather than traditional management through monetary policy targets and the consequences of local economic growth targets.
Third, the government's influence on the resource allocation of firms has recently become the focus of academic attention. The conclusions mainly reflect the situation for firms that are strongly influenced by government resource allocation. In terms of government orientation, we find that firms will actively adjust the levels of redundant employees after the government's unemployment target is adjusted, and this mainly occurs for firms with strong motivations for active adjustment.
We offer the policy suggestion that local governments should consider the quality of employment in their management of unemployment targets, in addition to considering the employment rate, and also should guide firms to create new and more suitable jobs to achieve the “higher quality and fuller employment” target proposed in the 19th National Congress of the Communist Party of China.

Clearly defined land property with complete rights has always been a necessary condition for agricultural and rural development and the effective allocation of resources. China's reform and opening up began with the rural land tenure reform. The implementation of household contract responsibility not only increased farmers' enthusiasm for agricultural production but also laid a solid foundation for subsequent reform while improving agricultural production efficiency. The unique design of the land tenure system has contributed greatly to China's rapid economic growth and structural transformation. Rural land is owned by collectives and the contracted management rights belong to farmers, and the Chinese government has adopted a series of reforms to stabilize farmers' land property rights in recent years, such as extending the contracting term, which ensures fairness and prompts incentives. These reforms have improved agricultural production efficiency and aided in stable macroeconomic development.
The land tenure system and household behaviors are the core issues of development economics, and the literature includes studies on farmers' investment and land transfer. As the largest developing country in the world, China's unique land tenure design and major reforms in recent years and the large-scale transfer of agricultural labor to non-agricultural sectors provide valuable opportunities to study land tenure and agricultural production. As a landmark event in China's rural land tenure reform, the promulgation of the Law of the People's Republic of China on Land Contract in Rural Areas gives farmers long-term and guaranteed land use rights and the right to legally transfer their land. This law effectively improves the stability of farmers' land property rights and promotes the effective allocation of land resources through active rural land transfer markets.
Accordingly, this paper takes the implementation of the Law of the People's Republic of China on Land Contract in Rural Areas at the provincial level as a policy shock and uses a difference-in-differences method to study the impacts of stable land property rights on household agricultural production and its' mechanisms. This research is mainly based on the National Fixed Point household dataset of the Ministry of Agriculture and Rural Affairs from 1995 to 2013. This dataset, which contains detailed agricultural input-output information, is the largest tracking sample survey in rural China. The quality of the data has been widely recognized. This paper first examines the impact of the policy shock on farmers' land transfer behaviors and agricultural total factor productivity. Next, this paper discusses the sources of agricultural efficiency improvement from the perspective of the direct incentive effects of stabilizing property rights and the reallocation of land resources. Finally, this paper discusses the heterogeneous effects of the policy shock with regard to population mobility, geographical endowments and transportation infrastructure.
The research conclusions of this paper are as follows. First, stable land property rights can greatly reduce uncertainty about the future, protect the legitimate rights and interests of market participants, and activate the land transfer market and improve agricultural efficiency. Second, the implementation of the Law of the People's Republic of China on Land Contract in Rural Areas mainly promotes land out rather than land in, and the efficiency improvement comes from direct incentive effects and the improvement of resource allocation efficiency. Stable land property rights can promote effective land transfer and optimize farmers' agricultural production and labor allocation decisions. Finally, stable land property rights can effectively alleviate the loss of agricultural production efficiency caused by population outflow and congenital disadvantages, and can improve the overall income level of rural households. This paper shows that clear property rights and reasonable expectation management are necessary conditions for market-oriented resource allocation.
We contribute to the literature in several ways. First, this paper verifies the direct property right incentive effect brought by the reform of stable land property right tenure arrangements. Even if farmers do not transfer land, they can directly improve agricultural productivity under the incentives of stable land property rights. Second, this paper indicates that the policy stabilization of land rights and legalization of transfer rights can effectively optimize farmers' labor and land resource allocation, and can increase farmers' welfare. Third, this paper discusses the heterogeneous impacts of land reform in combination with population mobility, regional endowments and transportation infrastructure, which are crucial to transitional China.

The “14th Five-Year Plan” promotes the opening of the financial industry and deepeningthe interconnection of domestic and foreign capital markets. With the pace of opening up of the capital market accelerating,its breadth, depth, and convenience are constantly improving, and the scale of foreign capital inflow is increasing. Cross-border capital market transactions will become an increasingly important financial activity. Opening of the capital market can attract foreign capital inflows, expand financing channels, improve the efficiency of the capital market, and accelerate the construction of a new development pattern in which dual domestic and international cycles promote each other. However, we must also be alert to the financial risks arising from the violent fluctuation of cross-border capital flows. The “14th Five-Year Plan” proposes improving the management framework of cross-border capital flows and the risk prevention and response capabilities under the conditions of opening up. Therefore, an in-depth understanding of the driving factors of cross-border capital flows, accurate judgment, and timely monitoring of the changes and impacts of the driving factors are critical for improving the management efficiency of cross-border capital flows and realizing a high level of financial openness.
Since the 2008 financial crisis, there has been a significant increase in global uncertainty, which has triggered a rise in global investors' sentiment toward foreign equity investment, especially in emerging economies. As the scale of China's cross-border equity capital flows continues to expand, exploring the impact of global investors' country-level risk sentiment on cross-border equity capital flows provides important policy implications that will help China improve its capital flow management framework and respond to the impact of global uncertain events.
This paper deeply explores the impact of global investors' country-level risk sentiment on cross-border equity capital flows in emerging economies by constructing a general equilibrium intertemporal selection model to describe the theoretical mechanism through which investors' country-level risk sentiment negatively affects the net capital inflows of cross-border equity and the moderating effect of investors' risk aversion. Further, this paper conducts an empirical test based on the micro data of EPFR global equity funds and the risk sentiment index of global investors at the country level constructed by big data text analysis technology. The results show that:First, the rise of global investors' country-level risk sentiment increases the country's overall risk premium level, prompting equity funds to significantly reduce the net capital inflow to the country, especially if investors' risk aversion is high. Second, improving the maturity of a country's financial market and exchange rate flexibility and maintaining a reasonable level of capital account control can alleviate the impact of global investors' country-level risk sentiment on the net capital inflows of cross-border equity funds. Finally, when global risk sentiment is extremely low or the net capital inflows of equity funds in various countries are extremely high, the impact of global investors' country-level risk sentiment is more significant.
The marginal contributions of this paper are as follows. First, it provides a theoretical basis for the impact of global investors' country-level risk sentiment on the net capital inflows of cross-border equity. By constructing a general intertemporal equilibrium selection model, this paper depicts the theoretical mechanism through which investors' country-level risk sentiment affects the net capital inflows of cross-border equity. Second, it provides robust micro evidence for the impact of global investors' country-level risk sentiment on the net capital inflows of cross-border equity. By combining the global investors' country-level risk sentiment index constructed by a big data text analysis method and the global equity fund-level micro data provided by the EPFR database, this paper captures global investors' perceptions of the overall financial and economic risk sentiment of each country. This paper also examines how global investors' country-level risk sentiment affects the cross-border capital allocation of global equity funds. Third, this paper provides detailed policy suggestions for emerging economies including China to improve the management of cross-border capital flows. We explore the heterogeneous impact of global investors' country-level risk sentiment on the net capital inflows of cross-border equity from horizontal and vertical dimensions such as fund level, country level, and whether it is in an extreme risk period. Based on our findings,we propose targeted policy suggestions for capital flow management.

China strives to build a system for market-oriented innovation in green technology to promote a comprehensive shift toward green economic and social development. However, there are multiple problems surrounding development for green and low-carbon technology (such as this technology having long development cycles, being complicated and carrying higher risks), and the global economic recovery in the post-COVID era is uncertain. This makes it difficult to satisfy the vast funds needed for green technological innovation, which places pressure on the achievement of carbon peak and carbon neutralization. The key to satisfying these vast funds is guiding the financial system to provide the required investment and financing support in a market-oriented way. For this reason, the People's Bank of China has fully improved policy incentives for reducing pollution and carbon emissions and policy constraints on such emissions through monetary, credit and macro-prudential policy. Compared with the green financial policy, can green financial products promote green technology innovation？
The reasons for the research on green bonds are as follows. First, although green credit plays a dominant role in China's green financial system, it is difficult to explore the effectiveness of green credit from the perspective of enterprises because of the limited availability of micro data. Second, compared with green insurance and green funds, green bonds have developed rapidly, and have produced good economic consequences by accelerating green low-carbon transformation, providing high-security financial assets and attracting foreign sustainable investment funds. Third, the characteristics of the mandatory disclosure of environmental information in green bond issuance also provide incentives and constraints for promoting green technology innovation through improving corporate governance. To sum up, against the background of limiting investment purposes and strengthening financial supervision, it is not clear whether enterprises can improve the enthusiasm for green technological innovation in the process of issuing green bonds and investing in green projects, thus increasing the number of green patent applications.
This paper selects the A-share non-financial companies listed on the Shanghai and Shenzhen Stock Exchanges issuing green bonds in 2016 and 2017 as the treatment group. Based on the difference-in-differences model, this paper tests the promotion effect of green finance on green technology innovation in enterprises. We find that green bonds can significantly improve the issuers' level of green innovation. This is mainly reflected in green invention patents and green utility model patents, and the promotion effect of issuing green bonds on both patent types is dynamic and sustainable. A heterogeneity test shows that the promotion effect of green bonds is not affected by the nature of enterprise property rights and the inherent technology level. Compared with heavy pollution enterprises, non-heavy pollution enterprises use green bonds to improve the level of green technology innovation more efficiently. Further analysis shows that the promotion effect of issuing green bonds on green technology innovation for enterprises stems from two channels: the resource effect and the supervision effect.
This paper makes several contributions to the literature. First, there is little literature on the relationship between green bonds and green technology innovation. This paper uses a difference-in-differences model to analyze the supporting effect of green bonds on green technology innovation, broadens the research perspective of green bonds and green technology innovation, and gives a tentative answer as to how green finance can serve the goal of carbon neutrality and promote the construction of an ecological civilization from a micro perspective. Second, this paper uses the mediating effect model to find that the issuance of green bonds has the resource effect and the supervision effect, and it clarifies the mechanism of the quality and quantity of green bonds to promote green technological innovation, which provides a reference for corporate governance to adapt to the construction of an ecological civilization in the new stage of economic development. Finally, it provides theoretical guidance for optimizing the green financial system and implementing hierarchical and focused green financial supervision and environmental governance to achieve a win-win situation of environmental protection and high-quality economic development.

E-commerce has become an important component and driving force of China's economic development. As a representative of the Internet economy, online sales show great potential. Against the background of the booming digital economy, this paper studies the value of online sales to predict future returns, using the sales data of the e-commerce platforms of listed companies.
Why do online sales predict expected returns？ First, online sales data provide incremental information to financial reports. With the rapid development of Internet technology, online sales have become an increasingly important business model. As the proportion of companies' online sales continues to grow, online sales are increasingly relevant to the companies' overall revenue. Online sales information is also instantly available. Therefore, it provides more timely and granular information on company operating performance than traditional financial statement data.
Second, investors are not fully aware of the content of online sales information. According to the theory of limited investor attention, investors have limited time and energy, and they may not fully understand all of the available information in a timely manner, which creates a temporary pricing bias. The A-share market has a large proportion of individual investors and an intense, speculative atmosphere in which investors mainly pursue short-term interests and lack the non-financial information that reflects a firm's fundamentals. Because online sales information is costly, this information may not be fully acquired and understood by investors in the A-share market.
Using the online sales data of 275 companies from January 2015 to April 2020, this paper shows that online sales data predicts future returns. Hedge portfolios based on online sales growth earn a 1.27% monthly excess return. The three-factor and five-factor adjusted returns are 1.40% and 1.35%, respectively. The Fama and MacBeth (1973) regression results show that online sales growth is positively correlated with future stock returns when we control for other related factors.
To further illustrate the value of online sales, we investigate the predictability of online sales over a longer period. The results show that online sales predict stock returns for the next two months. The cross-sectional analyses show that the predictability of online sales is more pronounced for firms with limited investors' attention, a higher proportion of online sales and higher arbitrage cost. Furthermore, we find that the investment value of online sales stems from their ability to predict future firm fundamentals. Further analysis shows that combining online sales and operating revenue may earn higher expected returns. In the robustness test, the predictability of online sales is still significant when we consider the potential impact of management forecasts.
Our study builds on and contributes to two strands of the literature. First, from the perspective of online sales, this paper shows the informational content of non-financial data, and it is supplemental to traditional financial statement information. Research has documented the investment value of non-financial information, but no study has examined the ability of online sales to predict stock returns. This paper expands the literature by investigating online sales data, which is an important form of non-financial information. Second, our study enriches the investing strategy research by showing that online sales information has investment value and that investors may obtain abnormal returns by constructing hedge portfolios based on online sales. From the theory perspective, the market anomaly based on online sales information challenges the efficient market theory. We take advantage of the unique big data on online sales in China. Our results have important practical value for improving the efficiency of the Chinese stock market and protecting minority investors.