A Bridge on Economic Issues between China and the World
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Learning by Investing: entrepreneurial spillovers from venture capital
Josh Lerner, Jinlin Li, Tong Liu, May 22, 2024The experience gained by individual investors from participating in venture capital funds significantly enhances their entrepreneurial capabilities in the high-tech sector.
Free Education's Impact on Schooling Outcomes: Direct Effects and Intra-household Spillovers
Naijia Guo, Shuangxin Wang, Junsen Zhang, Mar 05, 2025This study estimates the direct and spillover effects of a free education program on educational outcomes in rural China. We find that although the program encourages more eligible children to attend secondary school, it also leads to a decrease in high school enrollment among ineligible girls with eligible siblings, as they are more likely to choose work instead. In the long run, males exposed to free education have more years of schooling than their non-exposed counterparts. However, such effect is not found among females. This disparity suggests that a gender-neutral policy may have an asymmetric effect between males and females because of spillover effects through intra-household resource allocation.
Banking and Banking Reforms in China in a Model of Costly State Verification
Jie Luo, Cheng Wang, Mar 26, 2025We present a macro view of China’s financial system, in which a monopolistic banking sector coexists endogenously with bonds and private loans. In equilibrium smaller firms raise finance from private lending, larger firms do so through bank loans, and the largest firms do so by issuing bonds. The model predicts that expanding credit supply increases bank loans but reduces bond finance and private lending, in absolute terms and relative to total credit. In addition, removing the interest rate ceiling on bank lending—a recent reform in China—induces larger loans and higher lending rates, lowering the share of bank loans in total credit. We present empirical evidence to support these predictions.
Bilateral Economies of Scope in International Trade
Yao Amber Li, Sichuang Xu, Stephen R. Yeaple, Tengyu Zhao, Jan 15, 2025This paper presents evidence that firms’ export and import decisions within the same foreign market are complementary, due to bilateral economies of scope that allow substantial cost savings when engaging in both activities. By quantifying these savings through a structural model, we show that bilateral economies of scope significantly enhance firms’ participation in international trade and amplify the effects of trade liberalization, offering new insights for policymakers and researchers.
China’s Successful Securities Regulation to Protect Investors
Thomas Bourveau, Xingchao Gao, Rongchen Li, Frank S. Zhou, Nov 12, 2025In emerging markets, controlling shareholders may extract private benefits at the expense of minority investors. To safeguard cash-flow rights, regulators have turned to dividend requirements, yet their rigidity risks stifling investments and growth. In China, the regulator successfully adopted an intermediate “comply-or-explain” approach to strengthen investor protection without forcing firms to forgo investments and growth.
