nep-cna New Economics Papers
on China
Issue of 2016‒03‒10
nine papers chosen by
Zheng Fang
Ohio State University

  1. Who gains from credit granted between firms? Evidence from inter-corporate loan announcements made in China By He, Qing; Lu, Liping; Ongena, Steven
  2. Measure consumer preferences for pork attributes under different media coverage in China By Yan, Zhen; Yu, Xiaohua; Zhou, Jiehong
  3. China's Sex Ratio and Crime: Behavioral Change or Financial Necessity? By Cameron, Lisa A.; Meng, Xin; Zhang, Dandan
  4. Too hot to hold: the effects of high temperatures during pregnancy on endowment and adult welfare outcomes By Hu, Zihan; Li, Teng
  5. Solid fuel use in rural China and its health effects By Hua Liao; Xin Tang; Yi-Ming Wei
  6. The Feldstein-Horioka Puzzle in the Presence of Structural Breaks: Evidence from China By Dilem Yıldırım; Ethem Erdem Orman
  7. Financial Distortions in China; A General Equilibrium Approach By Diego Anzoategui; Mali Chivakul; Wojciech Maliszewski
  9. The Effect of Housing Wealth on Labor Force Participation: Evidence from China By Fu, Shihe; Liao, Yu; Zhang, Junfu

  1. By: He, Qing; Lu, Liping; Ongena, Steven
    Abstract: Who gains from inter-corporate credit? To answer this question we measure the impact of the announcements of inter-corporate loans in China on the stock prices of the firms involved. We find that the average abnormal return for the issuers of inter-corporate loans is significantly negative, whereas it is positive for the receivers. Issuing firms may be perceived by investors to have run out of worthwhile projects to finance, while receiving firms are being certified as creditworthy. Subsequent firm performance and investment confirms these valuations as overall accurate.
    Keywords: entrusted loan,inter-corporate loan,credit misallocation,certification
    JEL: G30 G14 G21
    Date: 2016
  2. By: Yan, Zhen; Yu, Xiaohua; Zhou, Jiehong
    Abstract: Media reports could help shape consumer attitudes towards food quality and safety. By introducing an information treatment with positive or negative media coverage, we study the impact on consumer preference for pork products. The hypothesis is tested by a hypothetical choice experiment with 788 samples in 15 cities in China. Attributes we take into account include traceability, farming style, brand and certificates, in addition to prices. The results indicate that the media coverage could significantly shape consumers’ preference. A comparison of the two treatments indicates that the positive information treatment could yield smaller WTP values for all attributes related to food quality and safety.
    Keywords: Media coverage, Choice experiments, Pork products, China, Agribusiness, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Q13, Q18,
    Date: 2016–02–15
  3. By: Cameron, Lisa A. (Monash University); Meng, Xin (Australian National University); Zhang, Dandan (Peking University)
    Abstract: This paper uses survey and experimental data from prison inmates and comparable non-inmates to examine the drivers of rising criminality in China. Consistent with socio-biological research on other species, we find that China's high sex-ratios are associated with greater risk-taking and impatience amongst males. These underlying behavioral impacts explain some part of the increase in criminality. The primary avenue through which the sex-ratio increases crime, however, is the direct pressure on men to appear financially attractive in order to find a partner in the marriage market. These marriage market pressures result in a higher propensity to commit financially rewarding crimes.
    Keywords: crime, marriage markets, risk-taking, time preferences, sex-ratio, one child policy, China
    JEL: O12 J12
    Date: 2016–02
  4. By: Hu, Zihan; Li, Teng
    Abstract: We examine the relationships between high temperatures during pregnancy and birth weight and later outcomes using random temperature fluctuations across 131 counties in China. One standard deviation increase of high-temperature days during pregnancy triggers about 0.07 kg lower birth weight, and, in adulthood, a 0.80 cm decrease in height, 0.27 fewer years of schooling, 13.30% less annual earnings, and 8.77%, 10.96%, and 7.31% of one standard deviation lower for evaluated health, word-, and math-test score, respectively. The impacts seem to be concentrated in the second trimester. Such effects should be included in calculations of the costs of global warming. Back-of-the-envelope predictions suggest that at the end of the 21st century, newborns on average will weigh 0.02-0.09 kg less; losses in height and education years will be 0.27-1.05 cm and 0.09-0.35 years, respectively. We also conclude that adverse effects of high temperatures are more likely to be consistent with physiological effects than income effects, because: (i) places with the high proportion of heat-tolerant crop area do not mitigate any estimated temperature sensitivity during pregnancy and (ii) total precipitation and high temperatures in the last year growing season before birth have no significant effects on all outcomes.
    Keywords: High temperatures during pregnancy, birth weight, adult welfare outcomes, global warming
    JEL: I12 I21 Q51 Q54
    Date: 2016–01–01
  5. By: Hua Liao; Xin Tang; Yi-Ming Wei (Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology)
    Abstract: Solid fuels such as firewood and coal are widely used for cooking and heating in the developing countries, which result in serious indoor air pollutions and health effects. Governments and international organizations have been devoted to addressing this issue for a long time. Based on the micro survey data from 1989¨C2011, this paper quantitatively investigate the situations and evolutions of cooking fuel using and its health effects in rural China. We have four findings: (i) most rural households still rely on solid fuels for cooking in modern China. ii) the cooking fuels are slowly diversifying in the last two decades, (iii) there are considerably geographical differences in cooking fuel using across China, and (iv) those resident usually using solid fuel have lower levels of self-assessed health and higher prevalence of respiratory diseases. We then draw some policy implications to reduce cooking fuel use..
    Keywords: rural residents; solid fuel; indoor air pollution (IAP); cooking; health
    JEL: Q54 Q40
    Date: 2016–02–10
  6. By: Dilem Yıldırım (Department of Economics, METU); Ethem Erdem Orman (Republic of Turkey Prime Ministry Undersecretariat of Treasury)
    Abstract: This study explores the empirical validity of the Feldstein-Horioka puzzle for China in the presence of structural breaks. To this end, we employ the recently proposed multiple-break cointegration test of Maki (2012), along with the one-break Gregory and Hansen (1996) cointegration test. Once the existence of the cointegration between domestic savings and investment is ensured by allowing for endogenous structural breaks, Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) estimation procedures are implemented to obtain reliable inferences from the cointegrating regression. Empirical results reveal that the relationship between Chinese domestic savings and investment has changed with the regime shift towards flexible exchange rates and the 2008-2009 global financial crises. More specifically, with the introduction of managed floating exchange rate regime, a substantial reduction is observed in the almost unitary saving retention coefficient of the fixed exchange rate period. Furthermore, the correlation has experienced a slight increase since 2009, which coincides with the worldwide protectionist policies adopted in the depth of the global financial crisis.
    Keywords: Feldstein-Horioka puzzle, saving-investment association, capital mobility, exchange rate regimes, 2008-2009 global financial crises, cointegration, structural breaks, China
    JEL: E21 E22 F21 C22 C51 G01
    Date: 2016–01
  7. By: Diego Anzoategui; Mali Chivakul; Wojciech Maliszewski
    Abstract: Widespread implicit guarantees and interest ceilings were major distortions in China’s financial system, contributing to a misallocation of resources. We analyze the impact of removing such frictions in a general equilibrium setting. The results show that comprehensive reforms generate better outcomes than partial ones: removing the deposit rate ceiling alone increases output, but the efficiency of capital allocation does not improve. Removing implicit guarantees improves output through lower cost of capital for private companies and better resource allocation.
    Keywords: Asia and Pacific;China;China, People's Republic of;Financial distortions, interest rate liberalization, implicit government guarantees, interest, guarantees, deposit, implicit guarantees, deposits, General, Asia including Middle East, Government Policy and Regulation,
    Date: 2015–12–24
  8. By: Cenk Gokce ADAS (Istanbul University, Faculty of Economics); Bibigul Tussupova (Ministry of National Economy,)
    Abstract: This study set out to examine impact of the global financial crisis on the stock markets returns of China, Japan, India, and USA through E-GARCH model and further it investigates the nature of volatility spillovers between stock indices during the global financial meltdown using Granger Causality test. Daily stock prices are used for the period from 6th of January, 2006 to 22nd of April 2011. The main findings are as follows; in all stock markets high volatility and setback on the daily returns exist due to the financial crisis. Further the global financial crisis less affected China’s stock exchange than the other stock markets whereas it influenced USA stock markets in large extent. Also stock returns volatility get moderated in the major Asian Countries stock markets after post crisis period but it has been remained in USA stock exchanges. Granger causality test shows that after the onset of the financial crisis, the USA stock markets have bidirectional influences on each other, but didn’t receive any volatility spillover from major Asian Countries stock markets. Indian stock market receives volatility spillover from all the stock markets. Japanese stock market receives volatility spillover only from USA stock markets. Chinese stock exchange doesn’t receive any volatility spillover from stock exchanges which examined in this paper.
    Keywords: Volatility Spillover; Financial crisis; China, Japan, India and USA Stock Markets; E-GARCH; Granger Causality.
    JEL: C58 G01
  9. By: Fu, Shihe (Southwestern University of Finance and Economics); Liao, Yu (Clark University); Zhang, Junfu (Clark University)
    Abstract: This paper uses the 2011 China Household Finance Survey data to estimate the effect of change in housing value on homeowners' labor force participation. Using the average housing capital gains of other homes in the same community as an instrument for the housing capital gains of a given household, we find that a 100 thousand yuan increase in housing value leads to a 1.37 percentage point decrease in female homeowners' probability of participating in the labor force and a 1.49 percentage point increase in their probability of becoming housewives. We find little effect on men's labor force participation.
    Keywords: housing wealth effect, housing price, labor supply, labor force participation
    JEL: J21 J22 R20 R30
    Date: 2016–02

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