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China's commercial paper financing experienced dramatic growth in January 2019. This paper examines the bank lending channel of China's monetary transmission to commercial paper, and more broadly, the factors that affect the growth of commercial paper, which is the first of its kind in the academic literature. The main conclusions include: the bank lending channel to commercial paper exists; the performance of the real economy also has a significant effect on the growth of the commercial paper. [ABSTRACT FROM AUTHOR]

China has been both active and cautious in developing a central bank digital currency (CBDC). China CBDC has been in research and development since 2014. The process speeded up in 2019. It is currently at the stage of expanding real field experiments. Residents in 11 areas can open e‐wallets linked to nine major banks. It is centralized digital cash designed to gradually replace traditional paper cash and coins (M0). It will be supported by the traditional double‐layer banking system. It is not blockchain based at issuance but is technology neutral in distribution. Internet and technology companies may join commercial banks in distributing the China CBDC. In the short run, the China CBDC will help improve domestic financial monitoring and policy implementation. In the long run, it may play a role in the RMB's internationalization or even the international monetary system's evolution. [ABSTRACT FROM AUTHOR]

This paper investigates the effect of the quality of environmental information disclosure of firms on their bank financing and further examines the moderating effect of formal and informal institutions on this effect using China as a laboratory. We find that the quality of environmental information disclosure is positively (negatively) related to the scale (cost) of bank financing. Furthermore, the formal institution (proxied by the official issuance of the Green Credit Guidelines) strengthens the above relationship. Moreover, the informal institution (proxied by bank connection) weakens the association between the quality of environmental information disclosure and bank financing. Our results are valid after addressing the potential endogeneity between environmental information disclosure and bank financing and remain unchanged in various robustness tests. Our findings affirm the decision usefulness of corporate environmental information disclosure that can be used by companies as an effective strategy for obtaining bank financing and the ethical integrity of borrowers to banks as an important group of capital market participants. [ABSTRACT FROM AUTHOR]

Credit risk prediction is a binary classification problem. Using two‐way decisions to classify defaulters may lead to decision errors due to insufficient information. To solve this issue, in addition to identifying borrowers as defaulters and nondefaulters, this paper introduced the delay‐decision mechanism in three‐way decisions, so that records acquiring more information do not make decisions immediately. A two‐stage credit risk prediction framework based on three‐way decisions was proposed to reduce decision risk. In this framework, the decision cost values of three‐way decisions were simplified by analyzing the credit risk prediction, and the expression of threshold calculation was also modified. An optimization objective was built according to the trade‐off between information gain and decision cost, and the particle swarm optimization algorithm was applied to learn the decision thresholds. After adding more supplementary information, the samples in the delayed‐decision region were made further decisions. A dataset from a commercial bank in China was employed to conduct experiments, and the results demonstrated that our proposed method outperformed various base classifiers. [ABSTRACT FROM AUTHOR]

The activity of the Shadow Banks in China has been the subject of considerable interest in recent years. Total shadow banking lending has reached over 60% of GDP and has grown faster than regular bank lending. It has been argued that unregulated shadow banking has fuelled a credit boom that poses a risk to the stability of the financial system. This paper estimates a model of the Chinese economy using a DSGE framework that accommodates a banking sector that isolates the effects of lending to the private sector including shadow bank lending. A refinement of the model allows for bank lending including lending by the shadow banks to affect the credit premium on private investment. The main finding is that while financial shocks are significant, it is real shocks that dominate. The model is used to simulate the frequency of growth slowdowns in China and concludes that these are more likely to be driven by real sector shocks rather than financial sector, including shadow bank shocks. This paper differs from other applications in its use of indirect inference to test the fitted model against a three‐equation VAR of inflation, output gap and interest rate. [ABSTRACT FROM AUTHOR]

This paper uses an agent‐based model to construct an interbank network for the Chinese interbank market using a sample of 299 commercial banks from 2014 to 2019. We analyze the importance and vulnerability of banks using the DebtRank algorithm. Our results show that the Chinese interbank market bears a certain level of systemic risk, especially among lower‐tiered banks. The results also show a bank is more vulnerable if it has a higher interbank lending ratio and greater financial connectivity. Meanwhile, a bank is more influential if it has a larger net worth and greater financial connectivity. [ABSTRACT FROM AUTHOR]

As the financial market in China persistently develops, the market risk of commercial banks' trading account and its risk management have become a heated topic for both financial institutions and regulatory authority. Based on the fixed‐income securities trading's daily practices of commercial banks, this paper develops a framework of market risk management for commercial banks' RMB trading accounts. [ABSTRACT FROM AUTHOR]

This paper investigates the factors that drive securitization in China using a panel dataset drawn from the financial statements of 83 commercial banks. Given the unique banking and regulatory environment in China, we consider both conventional motivations for securitization and the role of nontraditional factors, including shadow banking. Across a variety of econometric specifications, there is little evidence that banks securitize for typical reasons, including to fund liquidity, transfer credit risk, or reduce regulatory capital. We do find, however, that as banks approach limits on loan to deposit ratios, subsequent securitization activities rise. In addition, robust evidence is presented to show that high levels of nontraditional banking activities precede a decision to securitize. As there is little evidence to suggest that shadow banking activities are receding, the overall findings indicate that banks may be using securitization to mitigate regulatory risk. [ABSTRACT FROM AUTHOR]

This paper documents empirical support for a key micro‐level channel – banking structure change induced by entry of small banks – through which financial sector deregulation affects corporate innovation. Using China's banking deregulation on city commercial banks in 2006, we find robust evidence that banking structural change induced by the entry of small banks stimulates local industrial patent output. Furthermore, we find that the stimulating effects of small bank entry on local industrial patent output are more pronounced when the local banking system is previously dominated by large state‐owned banks and when the small banks have entered a city with more small and medium‐sized enterprises (SMEs). Our study suggests that banking structure change induced by small banks crucially affects the real economy. [ABSTRACT FROM AUTHOR]

This paper addresses the questions related to the cost of China's bank restructuring and how it has been financed. We first propose a framework for recognizing losses. Then, we examine the recent major moves by the Chinese Government to repair the country's bank balance sheets. Finally, we explore the implications of the Chinese Government's methods of funding bank restructuring. We find that the Chinese Government has been decisive in confronting the costly task of bank restructuring. So far, Chinese taxpayers have paid most of the bill for bank restructuring. [ABSTRACT FROM AUTHOR]

This paper examines how the risky lending activities of the state‐owned enterprises (SOEs) affect the effectiveness of monetary and fiscal policy in China with a shadow banking sector. We develop a dynamic stochastic general equilibrium (DSGE) macroeconomic model with two production sectors, where the SOEs have access to low cost funds from the commercial banks (also mainly state‐owned) and on‐lend to the private sector in the form of entrusted loans. The Bayesian estimation results show that higher restrictions on bank credit push SOEs to engage in more shadow banking in this form which dampens the effectiveness of contractionary monetary policy. Expansionary fiscal policy increases output, but crowds out private investment, which can further drain the financial market and exert a detrimental effect on the Chinese economy. [ABSTRACT FROM AUTHOR]

This paper reviewed the retail interest rate control deregulation in China over the period 1993–2015 to provide a preliminary assessment of the People's Bank of China's (PBC's) new operating framework. The interest rate controls triggered the development of deposit substitutes that banks used to circumvent the restrictions, which, in turn, drove deposits out of commercial banks. This gave rise to concerns about a deterioration of bank profits and a build‐up of financial fragility, which have pushed up the PBC's deregulation acceleration over the post‐2012 period. This study quantified the distortionary effects of these controls: disintermediation, a rising shadow banking system, and financial repression. Despite the official lifting of controls, retail interest rates are still subject to the PBC's window guidance and other pricing mechanism guidance. The preliminary assessment of the new interest rate corridor system is encouraging: Its bounds are effective most of the time. [ABSTRACT FROM AUTHOR]

This paper examines the impact of the Regulation for Commercial Bank Capital Management in China on banks' risk taking and disclosure behavior. We construct a risk disclosure index for Chinese commercial banks around this Regulation and find that compliance with the Regulation through a higher risk disclosure index improves bank soundness. We also find that the component of the risk disclosure index associated with risk compensation is the main driving factor of our findings. Moreover, our results show the effect of the Regulation is much smaller for publicly listed banks, suggesting a substituting regulation effect of the public capital market. [ABSTRACT FROM AUTHOR]

The real estate market has been booming in China for the past 10 years. Highly leveraged on banks' credit, it has aroused regulators' attention because of the potential catastrophic consequence, and it may produce on the whole financial system if the housing price boom bursts and massive defaults on mortgages occur. In this article, reverse stress testing engineering has been employed to study the factors impacting significantly on the mortgages' defaults and their implicit transition mechanism under different simulated scenarios. This work, which produces more precise snapshots of the financial institutes' risk tolerances by pushing the risk factors to their limits, could be used by regulators for formulating housing price control policies and by banking management for implementing the credit default risk warning system. [ABSTRACT FROM AUTHOR]

China's growth has recently been spectacularly high but there have been expressions of concern about its uneven regional distribution. It has been asserted that this has been partly due to national financial institutions (mainly state-owned banks) redirecting deposits from poor to rich regions and that this will be improved by smaller regionally-focussed institutions. We test these propositions using both informal analysis and more formal econometrics employing recent panel time-series methods. We find that (i) there is no evidence that deposits are siphoned off from the poor provinces for loans in rich provinces; (ii) financial disparities are positively related to output disparities, (iii) the link is stronger for rural credit co-operatives than for state-owned banks and (iv) the relationship is causal in both the long and short runs. [ABSTRACT FROM AUTHOR]

Urban commercial banks are regional banks which have gained tremendous importance in the last two decades in China. There is, however, a lack of research on regional banking, especially on the Chinese regional banking industry. Therefore, using an innovative spatial approach, this paper investigates the efficiency of 65 Chinese urban commercial banks across 26 regions during 2013–2017. A key finding for our sample is the significant spatial dependence of loans of Chinese urban commercial banks with their neighbouring regions' banks. Short‐run efficiency is increasing during the research period. For regions with less than three urban commercial banks, the average efficiencies are stable and relatively high. However, regions with more banks have both the highest and lowest efficient banks at the same time. These interesting results fit with the development process of Chinese urban commercial banking, in which the market restructuring has contributed to banks' efficiency. [ABSTRACT FROM AUTHOR]

This paper examines how bank lending decisions are affected either by executives' connections with banks, through their former banking experience, or by their political connections with governments, using a sample of bank loans granted to Chinese listed non‐state‐owned enterprises (SOEs) from 2003 to 2010. We find that bank loans are more closely related to profitability for firms with bank connections, while firms' political connections weaken this relationship. We further find that the influence of bank connections is more significant for firms from less supported industries or less developed regions. Furthermore, firms with bank connections are less likely to become financially distressed after the initiation of their bank loans and experience higher future stock returns, while firms with political connections experience the opposite outcome. Overall, our results indicate that in the context of a relationship‐based economy like China, firms' connections with banks create value by alleviating information asymmetry and improving banks' lending decisions, while political connections result in capital misallocation and subsequent deterioration in performance. [ABSTRACT FROM AUTHOR]

This paper examines the cross‐border effectiveness of bank resolution measures in the context of current and soon‐to‐be revised Chinese bank insolvency legislation, that is, the Bank Resolution Regulation. The general framework is regulated in the Chinese Enterprise Bankruptcy Law. With regard to the outgoing effects of Chinese bank resolution measures, the ultimate decision is in the hands of China's counterparts. However, it is proposed that the contractual approach could be a solution to enhance legal certainty. On the other hand, the incoming effectiveness of foreign resolution measures has to be firstly recognised in China. Three major tests in terms of recognition and enforcement are international agreement, reciprocity, and public policy exception. These criteria should be interpreted against the background of emerging international regime for bank resolution and latest development in the Chinese legal community. [ABSTRACT FROM AUTHOR]

This paper identifies determinants of branches' performances in Agricultural Bank of China using the spatial econometric approach. Studies on changes of spatial patterns of a financial industry are scarce, especially at the branch level. This paper is the first attempt to take spatial interdependence and urbanisation effects into account to investigate the determinants of China's bank branches' performances from 1997 to 2011. We have chosen the world's 10th largest bank, the Agricultural Bank of China, because it discloses the most complete panel data of all. Empirical evidence indicates that spatial effects and urbanisation have large, statistically significant impacts on branches' performances. It highly and positively corresponds to tertiary industry output (domestic consumption) and urbanisation. This signals that the ABC has evolved from a state-owned specialised bank to a listed commercial bank. [ABSTRACT FROM AUTHOR]

Abstract: We estimate the interdependence between Chinese monetary policy and financial stress using structural vector autoregression. To solve the simultaneity problem, we employ a strategy including both short‐run and long‐run restrictions that maintains the qualitative properties of monetary policy shocks derived from the literature. This method is applied to Chinese monthly data, together with a newly constructed index of financial stress in this paper. Our findings suggest there exists strong interdependence between monetary policy and financial stress. The financial stress index increases immediately by 0.4 of its standard deviation after a monetary policy shock that raises the M2 growth rate by 1 percentage point. An increase of financial stress by one standard deviation leads to a decline in the M2 growth rate by 2 percentage points. [ABSTRACT FROM AUTHOR]

An introduction is presented in which the editor discusess topics within the issue including corporate bankruptcy law in China; its impact on uneconomic state-owned enterprises; and role played by banks for rescuing companies.

This paper attempts to explain why sterilized intervention was so successful and sustainable in China during the first decade of the 21st century. We argue that the Chinese Government established a sterilization cost-sharing mechanism among the People's Bank of China, commercial banks and the household sector. On the one hand, Chinese commercial banks have to assume some of the sterilization costs by purchasing low yield central bank bills and maintaining high levels of required reserves. On the other hand, Chinese households assume some of the sterilization costs by bearing negative real deposit interest rates. The cost-sharing mechanism under financial repression prevents a huge quasi-fiscal loss by the People's Bank of China as well as high inflation. However, Chinese households have become victims of this financial repression. Faced with the pressure of changing the growth model from investment-driven to domestic consumption-driven, the interest rate will have to be liberalized eventually, which will, in turn, make sterilized intervention unsustainable. [ABSTRACT FROM AUTHOR]

The paper provides for the first time empirical evidence on the impact of economic globalization on bank efficiency in a developing economy. Using the data envelopment analysis method, we compute the efficiency of the Chinese banking sector during 2000-2007. The empirical findings suggest that the inefficiency of the Chinese banking sector stems largely from scale rather than pure technical inefficiencies. Examining different components of economic globalization, we find that greater economic integration through higher trade flows, cultural proximity and political globalization have significant and positive influence on bank efficiency levels. The empirical findings suggest that liberalization (restrictions) of the capital account exerts a negative (positive) influence on bank efficiency levels in China. [ABSTRACT FROM AUTHOR]

In this paper, we investigate whether the mutual satisfaction of Chinese banks and foreign strategic investors (FSI) in terms of their cooperation with each other affects the performance of Chinese banks. Since 2004, China's banking authority has conducted an annual survey on Chinese banks and their FSI, assessing levels of mutual satisfaction in terms of their cooperation. We use these survey results to examine the effects of satisfaction levels on the profitability of Chinese banks. Our results reveal that satisfaction affects profitability; that is, satisfied foreign investors and Chinese banks yield better performance. Satisfaction determinants for each party are also examined. Although the profitability of Chinese banks does not show a significant effect on the satisfaction of either party, bank loan to deposit ratios, regions of FSI home countries, and the type of Chinese banks are important factors that might affect satisfaction. [ABSTRACT FROM AUTHOR]

Since China joined the World Trade Organization in 2001, the pressure for bank reforms has mounted as China ought to have fully opened up its financial market to foreign competition by 2006. Efficiency is key for domestic banks to survive in a liberalised environment, but it appears that the last hope for raising bank efficiency is through ownership reform. Whether ownership reform and foreign competition can solve China's banking problem remains to be tested. This paper aims to answer this question using a non-parametric approach to analyse the efficiency changes of 15 large commercial banks during 1998–2005. We find that ownership reform and foreign competition have forced Chinese commercial banks to improve performance, as their total factor productivity rose by 5.6 per cent per annum. This coincides with the recent bullish Chinese stock markets led by three listed state-owned commercial banks. Despite such encouraging results, we remain cautious about the future of Chinese banks, as the good results may have been artificially created with massive government support and the fundamentals of the banks may be still weak. [ABSTRACT FROM AUTHOR]

Since 2001, foreign investors have been permitted to acquire minority ownership stakes in China's banks. This paper assesses whether there is any evidence of a cost efficiency payoff in those banks that have taken on foreign investment. Data envelopment analysis is first used to generate measures of cost efficiency for China's banks over the period 2001—2006. A second stage regression is then performed to determine whether foreign investment has an impact on cost efficiency. The results indicate a positive relationship, although one that is not statistically significant. Policy implications are discussed. [ABSTRACT FROM AUTHOR]

This paper argues that the deeply rooted cause of poor corporate governance practices in China's state-owned banks is the discretion enjoyed by policy makers to re-optimise their policy choices when they deem necessary and the consequent moral hazard leading to opportunistic behaviours of bank managers. By examining the case of Bank of China Hong Kong (BoCHK), the paper suggests that international listing can provide an effective mechanism to mitigate the consequence of discretionary policies and managerial opportunism at home because the company is now disciplined and regulated by a more developed capital market outside the home jurisdiction. It shows that BoCHK's IPO preparation and first two years of listing on Hong Kong Stock Exchange (HKSE) have induced in-depth corporate restructuring and noticeable improvement in governance practices. [ABSTRACT FROM AUTHOR]

This paper analyzes the important process about financial reform in the area of bank illiquidity in low-income emerging markets. This process is taking place within the context of a debate as to whether or not governments should try to rehabilitate existing state-owned banks or allow a new or parallel banking system to emerge in order to reduce non-perform ingassets from state-owned commercial banks. A comparison of institutional development in China and India suggests that new entry rather than the rehabilitation approach may work more favorably to reduce non-performing assets. The paper offers an explanation as to why governments choose rehabilitation over new entry. [ABSTRACT FROM AUTHOR]

Income inequality rises with financial development initially and then drops. We reach this conclusion by numerically solving a heterogeneous agent model parameterized to the Chinese economy. The model features a banking sector with Cournot competition, and the process of financial development in the model economy begins with the deregulation of the banking sector. Based on regressions with the fixed effects and the system generalized method of moments, the empirical analysis also suggests an inverted‐U relationship between income inequality and financial development using provincial data from China. [ABSTRACT FROM AUTHOR]

This paper examines the impact that ownership and governance structures have on how Chinese banks react to regulatory pressure. We find that the current regulatory regime induces banks to increase their capital, but its effectiveness in doing so varies based on whether the bank is listed or not, and also who is the majority shareholder. We also find that the degree of central government ownership and the political ties the chief executive officer of the bank has play an important role in the risk-taking behavior of banks. Overall, our results have a number of policy implications supporting the need to further reduce state ownership of banks in China to mitigate the prevailing moral hazard and dual-agency problems that arise from the government being both the regulator and the majority shareholder. [ABSTRACT FROM AUTHOR]

This paper provides an empirical examination of the regional banking structures in China and their effects on entrepreneurial activity. Using a panel of 27 provinces and four directly controlled municipalities from 1997 through 2008, we find that the presence of large banking institutions negatively correlates with small business development in local markets and that this negative relation is driven mainly by participation of large banks in the short-term loan market. Rural banking institutions, in contrast, are found to promote regional entrepreneurial activity. Moreover, large state banks facilitate small business development in concentrated markets. When we interact measures of banking financing by state banks and rural banking institutions with a set of provincial-level marketization indexes, we find that extensive marketization, factor market development and sophistication of legal frameworks mitigate the negative effect of large state banks on small business development. In provinces with advanced market development, efficient factor markets and favourable institutional settings, the positive effect of rural banking institutions on small business growth is even stronger. [ABSTRACT FROM AUTHOR]

Using a proprietary account‐level database from a commercial bank in China, we document that credit card holders can ease their credit constraints through the practice of cash‐out based on bogus transactions using credit cards. We find that such behaviour might be beneficial to both cardholders and banks. First, we find that a 1% increase in the cumulative number of credit card cash‐out transactions lowers the probability of default by 9.59%. Second, for private businesses, a 1% increase in the number of abnormal cash‐out transactions lowers overdue risk by 13.45%. Third, by lowering the overdue risk, the card‐issuing bank earns a larger profit. Our results are consistent with the notion that unconventional credit card cash‐out can mitigate the extent of capital misallocation in emerging markets. [ABSTRACT FROM AUTHOR]

The US credit crunch generated substantial turmoil in the global financial markets and directly caused the collapse of several world banking giants. Nonetheless, Chinese commercial banks, decoupled from the rest of the world, achieved remarkable results because of their risk-averse nature and banking reform during the past 10 years. To improve corporate governance and efficiency, the latest reform was focused on ownership transformation via foreign participation and stock listing. Employing data of 14 listed Chinese banks during the period 1999-2008, this paper tests whether IPO was an effective way to enhance banks' efficiency using two frontier approaches, data envelopment analysis and SFA. The results confirm our hypothesis and suggest that restructuring banks into shareholding companies improves both technical efficiency and scale economies. This conclusion is further confirmed by the technical inefficiency effects model which found that efficiency rating of listed banks was about 5 per cent higher than their prior IPO level. Facing tougher economic condition and increased competition, banks not only need to broaden income sources, cut expenditures, but more importantly, to strengthen their risk management to become more resistant to a volatile business environment. [ABSTRACT FROM AUTHOR]

This paper analyzes technical efficiency in China's banking system by large banks and small city banks as well as the pre-WTO and post-WTO accession periods. Using an unbalanced panel dataset for 63 banks over 1997–2006 and employing the stochastic frontier function approach, the empirical results reveal that the new entrants, small city banks, experienced a slightly higher efficiency score than incumbent large banks, on average. Compared with the pre-WTO accession period, the efficiency score is found to have improved significantly after entry into the WTO as a result of the competition effect. This competition effect is particularly relevant for small city banks. Finally, determinants of X-inefficiency are examined. [ABSTRACT FROM AUTHOR]

This paper investigates the role of the state in the liberalisation of the banking industry in China and the implications for the conventional convergence thesis of market segmentation and financial exclusion. I argue that the usefulness of the convergence thesis is constrained because it does not take region-specific institutional systems into consideration. This limitation is clearly illustrated by the experience of Chinese banking reforms. As China is still undergoing a series of institutional reforms to create a functioning market economy, the banking reforms implemented in China have created a ‘hybrid property’. ‘Hybrid property’ refers to a mixed public–private ownership structure that has been adopted for previously wholly state-owned commercial banks (SOCBs). This transformation of the property structure blurs the conventional boundaries between public and private property, while the state still plays an important role in the regulation and operation of these banks. I further argue that financial geographers have to account for the institutional path dependency of non-market economies and the consequent state response to public–private initiatives of ‘hybrid property’ in transitional economies. The ‘region-specific segmentation’ policy implemented by the Chinese state is a response to these public–private initiatives of ‘hybrid property’. Under this de facto rural–urban market segmentation policy, the state has to open up the banking industry to foreign banks in lucrative urban markets while maintaining much stronger control in rural areas to lower the level of financial exclusion. This intervention policy is inefficient but it is an acceptable compromise between the needs of corporate governance and private initiatives, and socio-economic and political stability in China. This is an indication of the institutional path dependency of the planned economy. Therefore, liberalisation in the Chinese banking industry and the resultant rural–urban market segmentation is spatially contingent on the public–private initiatives of ‘hybrid property’ in the transitional economy. [ABSTRACT FROM AUTHOR]

In this paper the author provides an overview of the process of China's convergence to International Financial Reporting Standards (IFRS) with particular respect to its banking industry. [ABSTRACT FROM AUTHOR]

This paper, using unique survey data from the banking industry in rural China, investigates the effect of incentive contracts on performance. In the context of China's economic transition, we find that the incentive contracts have a positive effect on the bank manager's performance in deposit taking and non-performing loan reduction. This finding is robust when we control for the endogeneity of incentive contracts. Our empirical results present evidence on the positive effects of incentive-based banking reforms in rural China. [ABSTRACT FROM AUTHOR]

This paper studies loan loss disclosures by banks in Hong Kong, Malaysia, and Singapore for the period 1993 through 2000. We find that unexpected loan loss provisions are positively related to bank stock returns and future cash flows. This indicates that Asian bank managers increase loan loss provisions to signal favorable cash flow prospects, and bank investors bid bank stock prices up when unexpected provisions are positive. These results are consistent with those obtained by Wahlen (1994) for US banks. We also examine the impact of the Asian financial crisis of 1997 on the loan loss variables. The results indicate that the association between the unexpected loan loss provisions and bank stock returns and future cash flows was significantly lower in the crisis years, relative to the non-crisis period. Evidently, discretionary loan loss provisions had no signaling value during the crisis. This suggests that macroeconomic uncertainty influenced the strategic behavior of Asian bank managers and investors. [ABSTRACT FROM AUTHOR]

The financial crisis was followed by a period of extraordinary monetary policy easing. This period of quantitative easing and zero interest rate policies had significant effects on financial markets and created a global investment environment dominated by a single global factor of central bank policy. Looking forward, “normal” markets should include: (i) higher interest rates, but lower in the steady‐state than pre‐crisis; (ii) greater cross‐country interest differentials; and (iii) lower cross‐asset return correlations. In this environment, idiosyncratic macroeconomic differences across countries matter more than a “risk on/off” global factor that dominated in the post‐crisis era so that the opportunity set for global macro investors should be better than it has been in the 10 years since the crisis. The future investment environment will not be simply that of the pre‐crisis era but will reflect the evolution of the world economy. No single country in this evolution is more important than China and the changes ahead in China will create both risks and opportunities for investors. [ABSTRACT FROM AUTHOR]

Abstract: Some of the policies central banks used during the Asian Financial Crisis had elements of unconventional monetary policy in that they involved the government buying assets that the private sector was unwilling to hold. We focus on public funding of bank recapitalizations in Thailand and the extraordinary purchase of equities in Hong Kong. Although it is important to calibrate these policies appropriately, we believe they helped to stabilize economies through channels that were not well understood at the time of the Asian crisis. [ABSTRACT FROM AUTHOR]

In this paper the influence of three Hong Kong bank failures on stock prices of the colony's banking industry is examined. As deposit insurance is nonexistent in Hong Kong, the world's fourth-largest financial center, an interesting environment is provided for testing contagion effects of bank failure on other healthy financial institutions. By examining contagion effects in an environment void of explicit deposit insurance, this study should provide interesting insights into the resiliency of modern-day financial markets. In turn, insights should also be provided into debates concerning the role and reform of deposit insurance and the rationale for regulation of the financial services industry in general. The results indicate that unexpected bank failure causes significant negative stock price reactions within the banking industry; yet, some banks are less affected than others. [ABSTRACT FROM AUTHOR]

This article examines the impact of "finance + technology" (Fintech) on different sizes of banks economic capital through the application of Fintech perspective in China during the period January 2011 and September 2019, using a dynamic panel generalized method of moments (GMM) estimation technique. The study found compared with small and medium‐sized banks, large state‐owned commercial banks have advantages in scale, capital and experience. There is a negative correlation between the scale of assets of commercial banks and economic capital. Further tests reveal the impact of Fintech on the profitability of different types of commercial banks shows significant heterogeneity. [ABSTRACT FROM AUTHOR]

Drawing upon positive psychology and a social relational perspective, this article examines the relationship between well‐being‐oriented human resource management (HRM) practices and employee performance. Our multilevel model examines relationships among collectively experienced well‐being‐oriented HRM practices, social climate (characterized by trust, cooperation, and shared codes and language that exist among individuals within the organization), employee resilience, and employee (in‐role) performance. Based on the two‐wave data obtained from 561 employees and their managers within 62 bank branches in 16 Chinese banks, our multilevel analyses provide support for our four hypotheses. First, we found a positive relationship between well‐being‐oriented HRM practices and social climate. Second, social climate mediated the relationship between well‐being‐oriented HRM practices and employee resilience. Third, we found a positive relationship between resilience and employee performance. Finally, employee resilience mediated the relationship between social climate and employee performance. This study is one of the first to unpack the social mechanisms through which well‐being‐oriented HRM practices increase development of resilience and subsequent employee performance at the workplace, namely through influencing group feelings of social climate. [ABSTRACT FROM AUTHOR]

China is in the process of undertaking financial reform in many directions-introducing small private banks in the banking sector, promoting bond and equity finance, increasing exchange rate and capital account liberalization, enhancing financial regulation, and promoting the efficiency and scope of finance. While some foreign analysts have focused on the importance of liberalizing the exchange rate and capital account, we believe these aspects of reform take second priority to traditional banking reform, even though the ongoing process in practice is to slowly implement reforms in all areas at once. [ABSTRACT FROM AUTHOR]

The effectiveness of the financial market is reflected in the financial crisis which mostly results in credit risk. The impact of credit risk in China is likely to affect the global economy since China is the fastest‐growing economy as well as the second‐best economy in the world in terms of gross domestic product. Using panel data for twenty‐eight listed commercial banks in China from 1990 to 2020, the study explored the relationship between credit risk and business performance. The authors utilized the Generalized Methods of Moments (GMM) as the primary estimator while the Pooled Mean Group (PMG) was used as a robust estimator. A negative and statistically significant relationship was found between non‐performing loan and return on equity, as well as loan loss provision and profitability of the bank. On the contrary, capital adequacy ratio revealed a positive and statistically significant relationship with bank performance. Credit growth on the other hand recorded positive but insignificant relationship with performance of banks. The findings will add up to existing literature on credit risk and business performance of commercial banks. [ABSTRACT FROM AUTHOR]

This study empirically investigates the relationship between banks' green lending and their credit risk, and how Chinese green finance regulations contribute to the solvency of individual banks and the resilience of the financial system. Analysing a sample of 41 Chinese banks from 2007 to 2018, we find that the association between a bank's (relative) green lending as a proportion of its overall loan portfolio, and its credit risk, depends critically on the size and structure of state ownership. While the implementation of China's Green Credit Policy reduces credit risk for the major state‐controlled banks, it increases credit risk for the city and regional commercial banks. This performance difference appears largely due to information and expertise asymmetries, with the city and regional commercial banks having less access to information and expertise necessary to evaluate the credit risk of green lending. Understanding this phenomenon can help policymakers tailor green finance policies according to banks' characteristics. It also suggests that mechanisms and platforms for the city/regional commercial banks to learn from the major state‐controlled banks could be beneficial. [ABSTRACT FROM AUTHOR]

This paper concerns the financial stability during the crisis. It introduces the experience of Chinese commercial banks. The Chinese commercial banks emphasise social responsibilities, which contributed to improve the stability of the Chinese financial system, while the increased financial stability brought tremendous positive effects to the development of economy, society and also the commercial banks themselves. We argue that in China, both the government and the financial authority enhance the commercial banks' social responsibility. There are sufficient incentives for the staff of commercial banks to increase the achievements of enhancing the social responsibilities under effective formal institutions. We further argue that, although the legal foundations of China and the EU are different, it is possible for the EU Member States to learn from China to increase the financial stability by enhancing the commercial banks' social responsibilities. We find that because the EU has much more developed financial markets, it is possible for the EU to create effective institutions and legal framework to achieve that goal through the market mechanisms. [ABSTRACT FROM AUTHOR]

Information about several papers discussed at the annual meeting held by African Development Bank (ADB) in Shanghai, China on May 17, 2007 is presented. The event focused on the issues involving ADB reform, development financing, debt management and aid to vulnerable countries. The meeting featured several speakers including Donald Kaberuka.

The financial linkages between the People's Republic of China (hereafter ‘China’) and the other Greater China economies of Hong Kong and Taiwan are assessed, and compared against those of China with Singapore, Japan and the United States. For both sets of links, there is evidence that ex post uncovered interest parity tends to hold over longer periods, and the magnitude of the parity deviations is shrinking over time. The deviations depend upon the extent of capital controls, and in certain cases, exchange rate volatility. However, while the money markets of China are increasingly linked to money markets in the rest of the world, our empirical results suggest that the banking sector—the main source of capital for Chinese firms—remains insulated. Copyright © 2005 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Using data from 114 Chinese banks from 2009 to 2018, we examine the effects of wealth management products (WMPs) on bank risk and the role of audit committee effectiveness. Three main results emerge. First, WMPs increase bank risk, especially insolvency risk, portfolio risk, leverage risk, and ROA volatility. Second, the effects of WMPs on bank risk are weaker in banks whose audit committee members have more financial expertise or longer board tenures. Third, further results show that: (a) principal‐guaranteed WMPs have weaker effects on bank risk than principal‐floating WMPs; (b) the policy known as "Notice 8" issued in 2013 weakens the effects of WMPs on bank risk; and (c) short‐term WMPs have stronger effects on bank risk than medium‐term and long‐term WMPs. [ABSTRACT FROM AUTHOR]