Financial Development In China Research Articles

Asymmetric and time-varying linkages between carbon emissions, globalization, natural resources and financial development in China.

In the real world, economic covariates follow asymmetric and time-varying patterns. Therefore, it is imperative to integrate these effects while estimating environmental and economic relationships. Although prevailing literature reveals various emissions-deriving and eliminating factors, however, there is a dearth of empirical evidence that estimates the asymmetric and time-varying effect of globalization, natural resources, and financial development from a multidimensional perspective in China. In doing so, we employ the nonlinear autoregressive distributed lag (NARDL) and cross-wavelet modeling framework to explore the long- and short-run nonlinear and time-variant association between globalization, natural resources, financial development, and carbon emissions from 1980 to 2017. The NARDL method has the benefit of discriminating the long-term and short-term asymmetric carbon emission responses due to a positive and negative shock in our primary variables of interest. Mainly, the findings of NARDL estimations confirm that positive shocks in globalization and financial developments have a significant positive impact on carbon emissions, whereas negative shock in natural resources has a significant positive impact on carbon emissions. Similarly, the outcomes of continuous wavelet transformation and wavelet transformation coherence confirm the causal linkages between covariates; however, this effect varies across different time and frequency domains. These results imply that environmental researchers should consider asymmetric transmission channels and time–frequency associations among variables to devise long-term sustainable policies.

Relationship Between the Scale, Structure, Efficiency and Economic Growth of Tobacco Financial Development in China

Objectives: This paper analyzes and studies the relationship between the scale, structure, efficiency and economic growth of tobacco financial development in China. Methods: Through the research on the theory of supply chain finance, this paper studies the products and application of the financial chain in the tobacco industry by using the methods of case analysis, literature research and case analysis. At the same time, taking the products of a bank as an example, this paper describes the product handling and operation process in detail, and analyzes the advantages and disadvantages of the products. Results: Commercial banks at home and abroad have gradually realized the power of the vigorous development of tobacco financial supply chain and actively developed tobacco supply chain financial products. The promotion of China's bank supply chain financial products at this stage will help banks to improve and adjust the traditional credit business structure. At the same time, it helps to improve and optimize the structure of tobacco customers and enhance the business cooperation between tobacco companies and banks. This can reduce the business risk of the tobacco industry and improve the overall profitability of the tobacco industry. Conclusion: The tobacco industry should steadily take advantage of the organization and coordination advantages of the government and make use of development financial funds to overcome difficulties. Only by improving the design and enlarging the leverage of financial support policies can the tobacco industry further develop.

The Impact of Medical Insurance on Household Stock Market Participation: Evidence From China Household Finance Survey.

This paper explores the impact of medical insurance on the possibility of household participation in the stock market and the portfolio share of equity, applying Probit, and Tobit models with the data from China Household Finance Survey (CHFS). The empirical results highlight that participating in medical insurance can significantly increase the possibility of households participating in the stock market and the portfolio share of equity, and have passed the robustness tests, including propensity score matching (PSM), altering estimation methods, replacing explained variables, and eliminating samples. Besides, heterogeneity analysis shows that the impact of medical insurance on household stock market participation is more significant in eastern region, urban areas, and households with higher income level. Further mechanism analysis implies that household participation in medical insurance mainly affects their stock market participation through preventive savings effect. It is necessary to improve the medical insurance system and encourage household participation in stock market so as to further promote financial development in China.

Energy mix, financial development, and carbon emissions in China: a directed technical change perspective.

Based on a two-sector (clean energy and dirty energy) model of directed technical change, we examine the relationship between carbon emissions, clean energy consumption, and financial development in China using the ARDL method. The results show that clean energy consumption reduces carbon emissions effectively but the effect of financial development is opposite, suggesting that financial development increases carbon emissions, contradicting the findings of many existing studies. Then, we decompose financial development on carbon emissions into two different effects: substitution and income effects. The substitution effect reflects more dirty energy consumption as a result of directed technological change promoted by financial development, leading to more carbon emissions. The income effect results in a decline in carbon emissions because financial development enables firms to use more clean energy. The empirical results indicate that the net effect of financial development has caused more carbon emissions and a 1% increase in financial development results in a 0.45-0.79% increase in carbon emissions. The policy implication is also discussed.

The Nexus between Digital Finance and Economic Development: Evidence from China

In the context of the digital economy and based on the characteristics of digital financial development in China, this paper investigates the effect of digital finance on economic growth and explores its influencing mechanism. A panel econometric model, mediating effect model, and instrumental variable method were employed to evaluate yearly data from 30 provinces of China from 2011 to 2018. The results show that the development of digital finance has significantly driven economic growth, which is quantitatively robust after the selection of historical data as instrumental variables and other robustness tests. A heterogeneity analysis proved that provinces in the central and western regions, which have a lower urbanization rate and lower physical capital, more clearly embody the facilitating impacts of digital finance on economic growth compared to their counterparts in other regions. Further analysis found that the development of digital finance has spurred the liberation of regional entrepreneurship, which in turn promoted economic growth—that is, there is an entrepreneurial channel by which digital finance could boost economic growth.

The asymmetric effect of COVID-19 outbreak, commodities prices and policy uncertainty on financial development in China: evidence from QARDL approach

COVID-19 epidemic has brought uncertainty to each sector of the global economy, including the financial sector. The widely spread disease has a drastic effect, which massively created health and financial crisis and virtually pushed the economy to the brink of recession. The study focused on the financial development of China during the COVID-19 pandemic and analyzed the long-term and short-term impact of COVID-19, oil prices, gold prices, and global economic policy uncertainty on the financial development of the country. The QARDL model, Wald test, and Granger causality tests are employed to assess the daily data of variables from January 1, 2020, to March 15, 2021. The study's empirical results revealed that an increase in the number of COVID-19 registered patients has an unprecedented negative effect on financial development, whereas the oil prices co-moved with the financial performance. On the other hand, gold prices and global economic policy uncertainty are negatively correlated with financial development. This study offers various policy recommendations to help the investors, government, and decision-makers to make better decisions for the improvement of the financial development of China.

Reexamining Spatiotemporal Disparities of Financial Development in China Based on Functional Data Analysis

Essentially, financial development is a continuous and time-varying process. This paper explicitly accounts for this by introducing functional data analysis to convert discrete observations into a smooth curve in order to represent the continuous process of financial development at the regional level. Regional disparities in financial development in China are reexamined from three dimensions: financial scale enlargement, financial structure adjustment, and financial intermediary efficiency. Disparities are then decomposed using an extended functional Theil index. It is necessary to introduce functional data into the research of financial development level. Through the functional research of China’s financial development level index of three different dimensions, the financial development level can be studied at the level of speed and acceleration, which fills up the research gap. The results imply that (1) the disparity in the level of financial scale enlargement and disparity in velocity and acceleration of financial intermediary efficiency are both statistically significant across regions, while the regional disparity in financial structure adjustment is insignificant, and (2) the downward trends of the total disparity in three dimensions are all dominated by the declining intraregional disparities. Since all 31 provinces have broken the traditional regional division, China does not need to implement region-specific protective policies in strengthening its deepening financial reforms.

Understanding the dynamics of the resource curse and financial development in China? A novel evidence based on QARDL model

This paper aims to examine the quantile behavior of the relationship between natural resource rent and financial development. Furthermore, gross domestic product, gross fixed capital formation, and trade openness are also under observation as explanatory variables for China's economy during 1981–2018. This research employs a recently developed quantile autoregressive distributed lag (QARDL) model of Cho et al.'s (2015) research. The present study contribution can be examined by applying QARDL as it depicts the causality patterns through a range of quantiles of natural resource rent and financial development along with other explanatory variables. The study findings confirm that the variable's relationship is quantile-dependent, highlighting the shortcomings of findings in earlier studies and providing meaningful contributions. Furthermore, the findings under Wald-test reject the parameter constancy for the Chinese economy. Additionally, our findings specified a resource curse hypothesis that shows that financial development is negatively and significantly affected by China's natural resource rent level. However, gross domestic product, gross capital formation, and trade openness are observed as positive financial development determinants during a similar study period. The study findings recommend that the Chinese government and policymakers lower the negative linkage between resource rent and financial development, specifically in the long-run.

Pattern Evolution and Localization of China's Financial Network Based on Different Types of Banks

The branch locations of financial firms have been widely used to construct financial network. China's financial main bodies are represented by banking industry, and commercial banks dominate the banking industry. However, there are some differences in the network characteristics of different types of banks. To extensively study the financial system and the changing trend of financial development in China, this paper explores the spatial pattern and localization of financial network based on different types of banks, including state-owned banks, joint-stock banks, foreign banks, city banks and rural banks. The results show that China's financial development is deeply rooted in the special Chinese economic system. Guided by state regulations and relations, state-owned banks follow the administrative principle to expand and allocate financial resources nationwide. Joint-stock banks follow the market principle to expand. Foreign banks expand in the principle of geographical openness. City banks and rural banks expand in the principle of geographical proximity. By comparisons, the study found that Beijing's primary position is due to the large concentration of state-owned banks, while Shanghai has the most mature financial market system and has more potential to become a financial center with global influence.

Internet Penetration and Regional Financial Development in China: Empirical Evidence Based on Chinese Provincial Panel Data

The Internet has revolutionized the patterns of financial development and economic growth. To assess the impacts of internet penetration on the financial industry, this paper analyzed ten-year Chinese provincial panel data and concluded that regional Internet penetration accelerates financial development. Furthermore, the efficiency of Internet investment in underdeveloped provinces is better than that in developed provinces. More meaningfully, Internet penetration promotes the transparency of the securities market and regional financial participation. This indicates that Internet technology facilitates the advancement of the finance industry and the securities market.

A Study on the Measurement of China's Financial Development Level

Based on the theory of financial development and the current situation of China's financial development, building a new index system based on the existing, then this paper uses the method of entropy weight to measure and analyze the level of China’s financial development from 2007 to 2017. The results show that the overall level of financial development in China is gradually rising, with a slow development in 2008 and a rapid development after 2014. The securities and insurance markets need to be further developed and the financing structure needs to be changed.

Natural resource abundance, technological innovation, and human capital nexus with financial development: A case study of China

The discourseon the impact of natural resource endowment and its effect on financial development has been an important research area in the last few decades. This study attempts to test the “resource curse” hypothesis in case of China for the period of 1987–2017. Unlike others, we introduce additional variables such as technological innovations, human capital, and trade openness into the finance demand function. We used an augmented Dickey-Fuller unit root test with and without structural breaks and Carrion-i-Silvestre et al.’s (2009) generalized least squares based test to examine the stationary properties of the variables. Similarly, to examine the presence of the cointegration relationship between financial development and its determinants, the Maki cointegration with multiple structural breaks approach is applied. The empirical results support the presence of the resource curse; that is, natural resources negatively affect financial development in China. Nonetheless, technological innovations, trade openness, and human capital affect financial development positively. The interaction of human capital and technological innovations is also positively linked with financial development. Our empirical findings have robust policy implications, highlighting the need to promote technological innovations and human capital development for effective use and management of natural resources to promote the development of financial sector.

Is financial development good for the environment? An asymmetric analysis with CO2 emissions in China.

This paper examines the asymmetric effect of financial development on CO2 emissions in China by controlling for the effects of economic growth and energy consumption. So far, no consensus has been found as regards the nature and the intensity of the relationship between CO2 emissions and financial development in China. While most previous studies found a positive effect of financial development on the environment, there have been also studies showing that financial development increases CO2 emissions in China or has no effect on it. Moreover, these studies have not accounted for a possible asymmetric impact that financial development can have on CO2 emissions in China. The empirical study in this paper is carried out with the unit root test with structural breaks and the nonlinear autoregressive distributed lag model. The obtained results show that an asymmetric effect exists. An increase in financial development helps decreasing CO2 emission. These results show the importance to support financial development in China to decrease CO2 emissions while sustaining economic growth.

Financial depth and international trade: evidence from China

There has been renewed interest in the link between financial development and trade amongst researchers. Financial development is a multifaceted concept that encompasses several dimensions; however, there is very limited empirical work on how these dimensions interact with international trade. This study offers insights into the link between financial depth (a dimension of financial development) and international trade utilising data from China’s trade flows with 145 trading partners between the years 2000 and 2016. Employing the FGLS estimation approach, this study concludes the following: (1) Financial depth significantly influences China’s international trade flows, with the direction of impact depending on the indicator of financial depth employed. (2) Remittances augment financial development in China and significantly influence international trade flows. (3) Banking crises in China’s trading partner economies have a significant negative impact on trade flows. (4) Strategic economic partnerships particularly trade agreements play a positive role in enhancing China’s trade flows.

A Study of Financial Development in China based on Financial Globalization and Trade Friction

Purpose - The purpose of this study was to investigate the possess and achievement of financial development in China based on financial globalization and trade friction background and to find the key to end the trade war between China and the USA. Design/methodology/approach - This study collected the financial data to do the descriptive statistics and compared the trade data between China and the USA to discuss the way easing the trade friction. Findings– First, this paper introduced financial globalization and what China should do to finish financial globalization, such as RMB globalization and investing in the international capital market. Second, we summarized the process and achievements of financial globalization in China. Third, we analyzed the risks China will face in the future. Fourth, This study pointed out that the Chinese economic structure could be the primary cause of this trade imbalance phenomenon. Research implications or Originality – Our research summarized a Chinese financial development pattern, which could be a successful financial globalization pattern to other developing economies. This research provides a way to ease the trade imbalance and friction and further influence the recent trade war. The end of the trade war would provide a more stable trade environment for Korea.

The interest group theory of financial development in China: Openness and the role of interest groups

AbstractThe interest group theory of financial development predicts that the incumbents' opposition to financial development will be weaker when an economy is open to both trade and capital flows. Based on regressions of financial development on trade and financial openness, existing studies only provide indirect tests of the hypothesis and deliver mixed findings. This paper proposes models for direct tests of interest group theory for China. Using Chinese cross‐province data, we define and measure interest groups based on the close tie between state‐owned enterprises and local government in China. The empirical results show that the opposition from interest groups to financial development cannot be weakened in provinces with high trade or financial openness alone. However, the opposition is indeed weakened in provinces with high levels of both trade and financial openness. These results provide robust support for interest group theory in accounting for cross‐province differences and time‐series variation in financial development in China.

Comments on The Impacts of Financial Development, Urbanization, and Globalization on Income Inequality: A Regression-based Decomposition Approach

June 01 2019 Comments on The Impacts of Financial Development, Urbanization, and Globalization on Income Inequality: A Regression-based Decomposition Approach Author and Article Information Online Issn: 1536-0083 Print Issn: 1535-3516 © 2019 by the Asian Economic Panel and the Massachusetts Institute of Technology2019Asian Economic Panel and the Massachusetts Institute of Technology Asian Economic Papers (2019) 18 (2): 144. https://doi.org/10.1162/asep_a_00705 Cite Icon Cite Permissions Share Icon Share Facebook Twitter LinkedIn MailTo Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Peer Review Search Site Citation Comments on The Impacts of Financial Development, Urbanization, and Globalization on Income Inequality: A Regression-based Decomposition Approach. Asian Economic Papers 2019; 18 (2): 144. doi: https://doi.org/10.1162/asep_a_00705 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search Dropdown Menu toolbar search search input Search input auto suggest filter your search All ContentAll JournalsAsian Economic Papers Search Advanced Search Hochul Shin, Seoul National University: This paper analyzes the determinants of GRP per capita in China. The authors decompose the contribution of each variable for regional inequality. The paper's strength lies in its use of unique data of financial development in China. It estimates the impacts of financial development, urbanization, and globalization on regional income inequality in China. The paper provides various policy implications. I have several comments. First, can urbanization be an independent variable for economic development? Urbanization can be the result of economic development. In Tables 5 and 6, urbanization contributed about half of regional inequality. If so, then what can explain the regional difference of urbanization? I suggest that the authors conduct a regression without urbanization. My next comment focuses on the coefficient of international trade. The paper shows this is significant and negative in Tables 3 and 4. It might indicate the correlation between unobserved random... You do not currently have access to this content.

Impact of financial development on trade-embodied carbon dioxide emissions: Evidence from 30 provinces in China

Abstract The literature on financial development and carbon dioxide (CO2) emissions is extensive. However, previous studies have not found the impact of financial development on trade-embodied CO2 emissions. Therefore, we build a dynamic panel model based on the extension of the STIRPAT model to verify the overall and indirect impact of financial development. We calculate trade-embodied CO2 emissions of 30 provinces in China in 2000–2014 using the single region input-output model (SRIO) by eliminating the impact of imported intermediate products on CO2 emissions embodied in exports (EXC). In order to measure financial development in China more comprehensively, we use financial scale development, financial efficiency and financialization to define it. Results show that the environmental Kuznets curve is confirmed at the level of China's provinces. In most provinces, EXC began to increase in 2006 and decline in 2010, but CO2 embodied in net exports (EC) began to decrease in 2005 and increase in 2010. The results of overall impact indicate that different financial development indicators have different effects on EC. But they all reduce EXC. The results of indirect impact through imitation innovation (IC) and independent research and development (RD) find that financial scale development increases EXC, however, financial efficiency and financialization decreases EXC. Financial scale development and financial efficiency can decrease EC, but financialization increases EC. The results of indirect impact through FDI show that financial scale development and financial efficiency can decrease EXC and EC. Financialization decreases EXC, but the impact of financialization on EC has obvious threshold characteristics. When the level of financialization is lower than the threshold value, financialization will reduce EC. There is regional heterogeneity in the impact of financial development on trade-embodied CO2 emissions. The conclusions of this paper are of great reference value for improving the level of financial development so as to realize the development of China's green trade.

Firms’ Technology Innovation Activity: Does Financial Structure Matter?

AbstractIn this paper we estimate the extent to which financial structure influences technology innovation activity (TIA) in China. Based on a variety of specifications and by employing panel data estimation techniques, we find that a capital‐market‐based financial structure supports TIA more efficiently than a bank‐bases financial structure does. Chinese firms in high‐tech industry are getting privilege from overwhelming financial development in China to enhance their TIA. Private firms in particular are becoming more and more active in TIA by taking advantage of China's developing capital market, whereas state‐owned enterprises are advancing in technological innovation owing to continuous financial support from the state‐owned credit market.

Demand-following or supply-leading? Trade openness and financial development in China

ABSTRACTThis study explores the causal relationship between financial development and trade openness in China, using the research methodology namely bootstrap Granger full-sample causality test and sub-sample rolling-window estimation. The results reveal that there is a significant bidirectional relationship between financial development and trade openness in China, pointing out the existence of both ‘demand-following’ and ‘supply-leading’ hypotheses. Furthermore, their relationship fits well the fact that China has experienced economic restructuring and structural changes in the past few decades. As financial development improves trade openness robustly, the Chinese policymakers should further increase financial reform to promote trade development.