As the central bank of the world's biggest emerging, developing and transitional economy, considering the extreme complicated constraints and structure characteristics, due to the mainstream theory are focusing on developed economies, PBC actively explore monetary policies not only based on international theory progresses and experiences but also on the Chinese conditions status quo, successfully promote growth and price stability, and achieve satisfactory policy outcomes.The financial crisis has brought new challenges to the traditional monetary economics, which has greatly promoted the reflection and progress of the monetary policy theory. In this article, we made comprehensive analysis of the frontier progress and new models of the monetary economics theory, monetary policy framework,operations as well as strategies, and analyzed the valuable experience of China's monetary policy practice, which are the same in essence. Therefore, we can draw significant implications both in theory and policy to transform the monetary policy, perform the structural reform of the supply side under nowadays China's new normal.

Using a sample data starting from January 4, 2007 to June 30, 2016, this paper investigates the impact of PBOC’s policy communications and monetary policy operations on RMB spot and forward exchange rate markets by adopting both univariate and multivariate GARCH models. The empirical results show that: 1) Monetary policy operations and communications have significant impact on RMB spot and forward exchange rate markets with both decreasing the markets’ volatility. 2) Different directions of PBOC’s policy communications have differential impacts on RMB exchange rate markets. 3) The differential effect of the PBOC’s policy communication on the onshore and offshore RMB exchange rate markets are also substantial. Our empirical results indicate that the effect of the Central Bank’s communication depends largely on the strategic policy selection and the timely adjustment on the policy communication. A carefully designed combination of the Central Bank’s communications and its regular monetary policy operations is thus the key for the Bank to be successful in guiding market expectations and reducing market volatility.

This paper uses SVAR model to quantify impact of the financialization of international commodity market on Chinese macroeconomic fluctuations during the period of 1998-2015. We find that the investment technology shock and the neutral technology shock are the main driving forces of our macroeconomic fluctuations; the effect coming from the international commodity price shock is weaker than the technology shocks, but is stronger than the monetary and fiscal policy shocks. Moreover, before the U.S. financial crisis in 2008, the financialization of commodity market mainly has dampening effects on Chinese macroeconomic fluctuations; after the financial crisis, the financialization of commodity market mainly has magnifying effects on macroeconomic fluctuations in China. Interestingly, the U.S. QE policy is the main reason for these magnifying effects.

The study of whether or not the population aging can bring the secondary demographic dividend does not reach an agreement. This paper develops an extended OLG model and studies the impact of delaying retirement age on saving, capital accumulation and output in the equilibrium. The study shows that it has an impact on gross output depends on the control effect between decreasing saving leading to output decline effect and increasing labor force leading to output increasing effect. Data simulate shows that increasing life expectancy can bring the secondary demographic dividend. When the retirement age is raised for 5 years or 10 years, the condition for bringing which is that the life expectancy should raised no more than 5.5 or 8. In terms of the secondary demographic dividend, our study shows that we write the improvement of life expectancy into the economic development index system will have important implications.

Bargaining Power is an important factor in wage determination. This paper extends De Loecker and Warzynski's(2012) method of calculating firm level markup to the labor market, and construct a measure to capture the workers’ bargaining power at the firm level. Then we use the 1999-2007 NBS firm level data, and examine the impact of privatization of SOEs on labor's bargaining power. The empirical results show that, the privatization of SOEs significantly reduces the labor's bargaining power. Further, the effect is more pronounced in the differentiated, labor intensive and highly competitive sectors. This paper has important policy implications for improving the capital-labor relationship as well as increasing the labor's income share.

For the recent rapid growth in China’s overseas mergers and acquisitions(M&A) , mainstream opinions believe it’s driven by the growing international competitiveness of Chinese firms, namely “competitive advantage hypothesis”. However, the traditional “competitive advantage hypothesis” cannot explain numerous stylized facts of China’s overseas M&A. To figure out the reasons behind the violation of the stylized facts and to discover the driven factors behind China’s M&A, this paper argues that we can not ignore the crucial role played by the domestic and foreign asset price, After illustrating the“price hypothesis”thoroughly and using the country-industry-year level data, we test the two different theoretical hypotheses discussed above. Results find no evidence supporting the“competitive advantage hypothesis”, but confirm the“price hypothesis”.We further prove our views by mechanism analysis and robustness check.

The patent variables are lead up to the growth model. Furthermore, we examine the effect of financial development using financial data and patent data of listed companies and clarify the innovation output channel that financial development promotes growth. Empirical studies show that credit market access indeed plays a positive role in innovation. The financing imperfection of the capital market limits its role. Innovation is an important way that financial development affects growth, which provides beneficial thinking about how financial development adapts transformation and upgrading of economic structure.

Small and medium-sized enterprises are playing an important part in improving the transition and development of China’s economy, however, they do not get enough financing from banks. Based on all financial institutions in 90 counties of 14 provinces from 2005 to 2013, this paper investigates the effect of bank competition on SME lending and offers a new perspective combined with government policies and incentive arrangements. Our findings show that the decrease of market concentration does not lead to the increase of market competition in terms of pricing capability and elasticity of profits to marginal cost, which has a positive effect on SME lending. According to this detailed survey data, we suggest regulatory authorities relax the limitation on the access of the banking industry, increase the elasticity of loan interest rate, accelerate the write-off of non-performing loans, and deepen the reforms of banks’ incentive mechanism, which improves the transition of banks from passive lending to active lending.

This paper discusses the relationship between customer-based concentration and bond yield spread in secondary market. The result shows customer-based concentration improves bond yield spread, which means customer-based concentration has risk effects. The positive relationship between customer-based concentration and bond yield spread exists when firms’ trade credit and customer relationship have higher risk. The firm risk can also accelerate customer risk effects. In the end, this paper finds that firms with a higher customer-based concentration will have higher sales volatility and higher bad debt risk in the future. The results contribute to literature on yield spread and customer relationship.

We study whether green incentives work in Chinese securities market in term of green concept stocks with energy conservation and environmental protection technology. Based on the FF Three-Factor Model, we construct a Four-Factor Model by introducing a green factor. The empirical results show the green Four-Factor Model can explain the excess returns of green securities; relative to other stocks, risk premiums exist in green concept stock block, namely green incentive; However, China securities market has not yet distinguished efficiency levels of green technologies. Our conclusions would be meaningful for portfolio selection strategies in the new normal economy and imply Chinese securities market needs a more professional green rating system.

Is there any information content of firms’ pollution and does the investors use this information to make investment decision? Taking the listed firms in steel industry, we find that the firms’ air pollution discharge has a significant positive correlation with its monthly production and its seasonal profit. But the investors seems do not use this information. To construct the hedged arbitrage portfolio by buying the heaviest-pollution firms and selling the least-pollution firms, investors will gain a significant annual return, ranging from 4.92% to 29.44%.

This paper investigates the impact of venture capital on innovation efficiency. The sample consists of China’s firm-level panel data during 2002-2013. The empirical results show that venture capital has significantly positive effects on innovation efficiency, which is measured by patent applications and patent quality including invention patent applications, valid patents, the number of IPCs, and the number of claims. For firms of industries which are more dependent on external finance and are more high-tech intensive, and firms in regions with better property right protection, the impact of venture capital on corporate innovation efficiency is more significant. The characteristics of venture capital firms also matter. It is found that non-state-owned venture capital increases innovation efficiency more profoundly than state-owned venture capital does. And, more reputable and better networked venture capital firms have more significant impacts on innovation efficiency.

In this paper, we focus on the low price premium effect and suggest nominal price illusion is one of the main causes from behavioral finance perspective. Using a dataset which contains 175,736 firm-month observations of Chinese A-share listed companies from 1999 to 2014, we document that there is indeed a superior performance attached to low price stocks, i.e., the low price premium effect. What’s more, the bigger the size of individual investors, the stronger the low price premium effect, which further supports our theoretical expectation. Meanwhile, we find evidence that institutional ownership, security analyst coverage, and short sales can all significantly alleviate the low price premium effect, thereby contributing to the rectification of mispricing and resource misallocation in capital markets. Furthermore, we find that for the sake of maximizing their firms’ market value, firm managers would take advantage of investors’ particularly individual investors’ nominal price illusion to carter those investors’ preference for relatively low price stocks through issuing stock dividends. Our findings would give helpful insights for market operations and policy making into revealing the puzzle of low price premium effect and improving pricing efficiency in China.