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on China |
| By: | Jin Cao; Valeriya Dinger; Ragnar E. Juelsrud; Karolis Liaudinskas |
| Abstract: | In this paper, we examine how a trade conflict’s impact on the real economy can be amplified by financial intermediaries. After China’s implicit ban on the imports of Norwegian salmon in response to the decision on 2010 Nobel Peace Prize, we find that banks that are highly exposed to the salmon industry cut back lending to non-salmon firms and households by 3-6 percent more than other banks. Furthermore, we find that the reduction in lending was not driven by the erosion of bank capital, but rather by the shift in expectations about the performance of loans to salmon producers, which drove highly exposed banks to increase their loan loss provisions and reduce risk-taking. |
| Keywords: | Trade shock, Bank lending channel, Expectation shock. |
| JEL: | F14 G21 |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:bno:worpap:2023_6&r=cna |
| By: | Jing Liu; Ilhyock Shim; Yanfeng Zheng |
| Abstract: | Blockchain, a type of distributed ledger technology, has become a buzzword in the past decade. Its potential to challenge current business practices such as financial transactions has been touted or criticised by numerous researchers and practitioners. Nonetheless, academic literature thus far has provided little empirical evidence on how financial services benefit from such new technology. We exploit the emerging asset-backed security (ABS) market in China and its rapid adoption of blockchain technology. We examine whether blockchain-based ABS products enjoy better pricing than those not based on blockchain after controlling potential endogeneity with coarsened exact matching. Analysing approximately 5, 000 ABS products issued between 2015 and 2020, we show that the adoption of blockchain technology indeed reduces the yield spread by approximately 25 basis points and that this benefit is heterogeneous across the different underlying asset classes and institutional arrangements. Interestingly, we find that social factors such as familiarity among key ABS parties may increase or decrease the benefit of adopting blockchain in ABS products depending on the asset classes and regulatory environments. Our study makes a timely contribution to the debate surrounding blockchain technology and its implication for the financial sector. |
| Keywords: | asset-backed security, blockchain, financial technology, social embeddedness, technology adoption |
| JEL: | G30 G32 M40 O33 |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:1116&r=cna |
| By: | Youming Liu |
| Abstract: | Copyright law grants copyright owners exclusive rights so that they have adequate financial incentives to create and innovate. However, when firms are copyright owners, they can leverage their right to sell or distribute products exclusively and thus obtain excessive financial gains. This paper studies the music streaming industry, where streaming services compete for exclusive licenses from music labels. Service providers use unique content to attract users, tailoring their services to individual preferences to create switching costs that lead to user lock-in. Using theoretical analysis and descriptive empirics, I show that exclusivity confers advantages in competition for a service that can generate larger lock-in effects. I then construct a dynamic structural model in which consumers face switching costs when making subscription decisions. I estimate the model using monthly data from China’s music streaming market over 2014–17. Finally, I simulate market outcomes under two alternative policies: a compulsory licensing provision and a mandatory data portability policy. The policy simulation shows that compulsory licensing that enforces non-exclusive distribution would not improve market competition by “leveling the field” between dominant and small services as intended. On the contrary, this policy increases market concentration, enlarging the gap in market share between dominant and small services. In contrast, mandatory data portability that reduces switching costs would decrease market concentration, bringing more users to smaller services. |
| Keywords: | Econometric and statistical methods; Firm dynamics; Market structure and pricing |
| JEL: | L13 L42 L51 |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:23-43&r=cna |
| By: | Yang, Hong; Fulton, Lewis |
| Abstract: | The US and Europe have ambitious plans and targets for light-duty electric vehicle (EV) market growth. This study estimates planned EV production capacity in both regions and investigates whether coordinating their combined production capacity would help them meet targets. We find that, while each region is developing a strong EV production capacity domestically, either may fall short of their targets given investments in EV production announced to-date. Transatlantic trade can serve as a critical “spare capacity” to add assurance. Yet, in scenarios where both regions seek higher EV sales targets, a combined shortfall in annual EV production capacity could reach over 6 million EVs compared to the 20 million needed by 2030. An additional investment of about $42 billion across both regions could address this concern, however, time is getting short to build new plants and bring them online. The capacity shortfall may persist even with planned EV production capacity from other major manufacturing centers such as Canada, Mexico, Japan and South Korea. Additional policies and incentives will be needed to ensure planned capacities are developed in a timely manner. Some options include providing incentives to invest and reducing barriers to trade. Exploring the potential supply of vehicles from other major EV manufacturing countries, such as China and India, is recommended. |
| Keywords: | Engineering, Social and Behavioral Sciences, Electric Vehicle, Production, Investment, Transatlantic, Trade, North America, Europe, European Union |
| Date: | 2023–08–23 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:itsdav:qt07z8k57q&r=cna |
| By: | Jiayi Wen (Xiamen University); Haili Huang (Xiamen University) |
| Abstract: | This paper examines the long-term gender-specific impacts of parental health shocks on adult children's employment in China. We build up an inter-temporal cooperative framework to analyze household work decisions in response to parental health deterioration. Then employing an event-study approach, we establish a causal link between parental health shocks and a notable decline in female employment rates. Male employment, however, remains largely unaffected. This negative impact shows no abatement up to eight years that are observable by the sample. These findings indicate the consequence of ``growing old before getting rich'' for developing countries. |
| Keywords: | Gender Inequality; Female Labor Supply; Health Shock; Aging |
| JEL: | D13 I10 J22 O15 |
| Date: | 2023–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002609&r=cna |