Latest

Book Synopsis The Future of Cities: The Shanghai Model of Migrant Children’s Education

Yuanyuan Chen, Shuaizhang Feng, Nov 15, 2017

Using a longitudinal survey conducted by the authors in Shanghai since 2010, we empirically examine the differences between migrant schools and public schools. We find that migrant students in migrant schools performed substantially worse than their counterparts in public schools in 2010, but the difference decreased by half in 2012, thanks to financial subsidies to migrant schools. We also show that even fortunate migrant students who are able to enroll in public schools tend to go to poorer quality schools; however, there is no evidence on negative peer effects of migrant children in public schools.

The “Trusted-assistant” Loan in Nineteenth Century China

Meng Miao, Guanjie Niu, Thomas Noe, Nov 08, 2017

In this paper, we analyze “trusted-assistant loans,” which were loans issued (typically) by Shanxi Banks during the Qing period to finance newly appointed scholar-officials. Even though creditors lacked legal rights and, in fact, lacked every repayment enforcement mechanism advanced by economic contract theory, repayment rates on these loans were relatively high and they constituted a large and profitable portion of many banks’ loan portfolios. This paper develops a theory of “resource-based” debt contract enforcement that rationalizes repayment and tests the hypothesis of this theory using data from scholar-officials’ diaries and nineteenth century Chinese bank records.

The Cost of China’s IPO Regulations on the Functional Efficiency of its Financial System

Charles M. C. Lee, Yuanyu Qu, Tao Shen, Nov 01, 2017

In sharp contrast with the market-and-disclosure based system in the US, IPOs in China are subject to strict regulatory rationing and control. We investigate the pricing implications of China’s IPO regulations for its publicly listed companies. We find that these regulations will give rise to significant market frictions with economic consequences for the prices, returns, and even investment decisions of China’s publicly listed companies.

Daily Price Limits and the Magnet Effect

Ting Chen, Zhenyu Gao, Jibao He, Wenxi Jiang, Wei Xiong, Oct 25, 2017

We find that the widely adopted daily price limit rules may induce large investors as a group to pursue a destructive trading strategy of pushing stock prices to the upper price limit and then profiting from selling these stocks on the next day. Their trading accelerates the price increase on the day that the upper price limit is reached, thus leading to the so-called Magnet Effect. This unintended effect renders the daily price limits — a market stabilization scheme — counterproductive.

Recent

China’s Great Housing Boom

Kaiji Chen, Yi Wen, Oct 11, 2017 

Household Finance in China

Russell Cooper, Guozhong Zhu, Sep 20, 2017 

Credit Expansion and Allocation Dynamics under Economic Stimulus

Lin William Cong, Jacopo Ponticelli, Sep 13, 2017 

Resolving China’s Corporate Debt Problem

Wojciech S. Maliszewski, Serkan Arslanalp, John Caparusso, José M. Garrido, Si Guo, Joong Shik Kang, W. Raphael Lam, T. Daniel Law, Wei Liao, Nadia Rendak, Philippe Wingender, Jiangyan Yu, Longmei Zhang, Sep 06, 2017