Market Reforms Research Articles

Preface: 2nd International Conference on Portfolios, Economy and Enterprise Reform (PEER 2024)

This book collects papers selected from the 2024 2nd International Conference on Portfolios, Economy and Enterprise Reform (PEER 2024), which was successfully held in Kobe, Japan from March 16-17, 2024. PEER 2024 welcomes researchers, experts, economist, and industry professionals to an open forum where advances in the fields of portfolios, risk management, financial security, regional economic, marketing, business management, and enterprise reform can be shared and examined. The conference is an ideal platform for keeping up with advances and changes to a consistently morphing field. Leading researchers and industry experts from around the globe will be presenting the latest studies through papers and oral presentations. PEER 2024 invites scholars and researchers all over the world to discuss the state-of-the-art and the development of the financial technology. The conference set up a variety of activities such as general report, session report, poster exchanging, technical exhibition and technological innovation contest. This conference provided delegates with a good opportunity to exchange new ideas, establish research and/or business contacts, and establish potential partnerships for global partnerships. With best regards, Organizing Committees of PEER Kobe, Japan

Educational Expansion as a Driver of Longer Working Lives?

This study investigates the contribution of educational expansion to changes in labour force participation among Europeans aged 55-74 between 2000 and 2019, while accounting for changes in educational inequalities in labour market activity. We use data from the European Union Labour Force Survey (EU-LFS) for 26 countries and Kitagawa-Oaxaca-Blinder decomposition methods to analyse the extent to which changes in the education structure may account for rises in labour force participation rates among older workers in these countries, and the degree to which returns to education have changed. Overall, we found that educational expansion is positively associated with increases in labour force participation, albeit with substantial cross-country variation in the scale of this association. A driving factor was the decrease in the share of the population with low education levels, followed by an increase in the share of those with high education levels. While activity rates rose in most countries and among all levels of education, the largest increases were observed among people with a medium level of education. Activity rates of low-educated older workers, especially women, grew at a substantially lower pace in some countries, exacerbating educational inequalities in labour force participation at older ages. The study suggests that educational expansion has been a driver of longer working lives in Europe. However, it also indicates that changes in health, working conditions and age norms at the microlevel, as well as pension and labour market reforms at the macrolevel, can be assumed to have played a dominant role in countries where increases in labour force participation were the most significant.

From vocation to profession: multiple identities of Chinese management academics

The academic landscape in China has undergone a profound transformation, shifting from a spiritually rooted vocation to a model driven by managerial efficiency, catalyzed by market reforms that dismantled the traditional, centrally planned system. This seismic shift has forced scholars to adapt to a performance-oriented environment, leading to significant transformations in their professional identities. Contemporary literature, primarily centered on Western role-theory perspectives, often fails to capture the intricate cognitive dynamics that shape academic identities under the varied influence of power dimensions. This study addresses this gap by exploring how Chinese academics’ identities are constructed amidst a complex interplay of power dynamics, external changes, and internal motivations, moving beyond simplistic group-level categorizations. Employing an intersectional approach within a multidimensional organizational power framework, this research utilizes case study methods to probe deeply into the multiple identities of academics in the Business Management discipline across various Chinese higher education institutions. The study reveals a dynamic interplay among multiple power dimensions, including American research hegemony, industrialization of academic governance, self-regulation, and rebellion against ‘academic games’. These forces collectively shape distinct identity modules among Chinese academics: fanatic convert of American research, career survivor, diligent game player, and career retreater, each responding uniquely to the evolving academic pressures. This research significantly enhances our understanding of academic identity construction by extending beyond traditional role-based analyses to encompass a broader spectrum of cognitive processes. It highlights the nuanced intersectionality of academic identities, effectively integrating structuralist perspectives with personal agency. This comprehensive examination provides critical insights into the development of Management disciplines, university governance, and professional practices within the academic community in China.

Star analyst activities and stock price synchronicity: Korean equity market reforms

This study examines whether analysts' informativeness and activities change following regulatory reforms strengthening market surveillance in Korea. Only star analysts provide firm-specific information, particularly for firms with characteristics favored by fund managers. However, such information provision is only significant before the equity market reforms. After the reforms, star analysts tend to cover more financially stable firms with larger sizes, higher earnings, higher stock liquidity, and lower leverage. Difference-in-differences analyses confirm that the synchronicity of chaebol firms with brokerage firms is lower than those without brokerages, indicating that the reforms' effect is mitigated for those with chaebol-affiliated analysts.

A new era for African health systems: Market shaping and the African Continental Free Trade Area (AfCFTA)

AbstractThe COVID‐19 pandemic has forced a reflection on the origins of supplies in African healthcare market and underscored the need for an increase in local manufacturing of medical supplies. Several African countries’ health markets have been heavily reliant on imports. First, this article demonstrates how the African healthcare market has had a high import dependency and the role that the African Continental Free Trade Area (AfCFTA) could play to reverse this. It is estimated that African countries import between 80% and 94% of medical supplies, 75% of testing kits, between 70% and 95% of pharmaceuticals, and 99% of vaccines. Second, during the COVID‐19 pandemic, countries imposed export restrictions which impacted the flow of medical supplies to African countries. This finding highlighted the limited production capabilities on the African continent and reiterated the need to strengthen continental value chains and local manufacturing capacity to establish the continent's New Public Health Order. Third, there was the emergence of local innovations seeking to minimize the impact of these supply chain disruptions. Using case studies on the local production of COVID‐19 testing kits and personal protective equipment, the article highlights progress made toward health market reform. It calls attention to the implementation of the AfCFTA to strengthen the supply, manufacturing, and trade of medical resources. Fourth, this article highlights countries that have African‐made pharmaceuticals and vaccinations and the importance of regional hubs to expand these products in African healthcare markets. It concludes by discussing investments made to expand local manufacturing of health products.

Reworking uneven geographical development: the spatial logic of China’s rural banking reforms

Abstract Drawing on financial geography literature and the concept of state rescaling, this article investigates the state–finance nexus with an emphasis on state spatial reconfiguration. Through a historically and geographically informed political economic analysis, it argues that China’s state-led, market-oriented rural banking reforms are not merely the outcome of a deepening market logic within the financial administration of the rural sector. They are also crucial for state spatial reconfiguration to address uneven rural and urban development. The article calls for greater sensitivity towards relational spatiotemporality and uneven development to comprehend fully the spatiality of the state–finance nexus.

Crop insurance, factor allocation, and farmers’ income: evidence from Chinese pear farmers

Crop insurance, as a crucial tool for agricultural risk management, holds significant importance in increasing farmers’ income. This study analyzed the intrinsic relationship and mechanism between crop insurance, factor allocation, and pear farmers’ income. Using field survey data from 1,337 pear farmers in Xixian and Weixian counties in China, we employed OLS regression models and mediation effect models to empirically investigate the direct and indirect impacts of crop insurance on pear farmers’ income. Additionally, we examined the moderating role of agricultural cooperatives and group heterogeneity. The research findings revealed the following: (1) Although crop insurance increases agricultural expenses, it mitigates income losses due to disasters, ultimately leading to a net increase in pear farmers’ income. (2) Crop insurance enhances agricultural labor and machinery inputs, and encourages pear farmers to adopt green production techniques, thereby boosting their income. (3) The beneficial impact of crop insurance on pear farmers’ income is even more pronounced when farmers are members of cooperatives. (4) Heterogeneity analysis showed that for pear farmers who make individual decisions and have smaller land areas, crop insurance can increase their income, while its impact on farmers who make group decisions or have larger land areas is not significant. In conclusion, this study proposes to promote the development of crop insurance, deepen factor market-oriented reforms, support and guide the development of cooperatives, and pay attention to the heterogeneity among different groups of farmers.

Adjustments in VAT rates and business innovation: Empirical insights from China

China aims to alleviate corporate financial pressures and encourage high-quality economic development through initiatives such as value-added tax (VAT) rate reform. This study employs the difference-in-difference (DID) approach to investigate the effect of the 2017 VAT rate reform on corporate innovation, taking the reform as a quasi-natural experiment. We find that the VAT rate reform has significantly promoted firm innovation and that increasing profitability serves as the primary channel. The innovation-promoting effects of the VAT rate reform are most prominently seen in a number of different types of businesses: those with lower intermediate input ratios, those operating in less monopolistic industry environments, state-owned enterprises, non-exporting businesses, entities with limited financial resources, and companies located in non-eastern China. This study makes a case for tax reforms in other nations as well as a reference for China's market-oriented reform and further VAT reform.

Relations between central and regional executive authorities in the context of preparation for radical market reforms in Russia at the end of 1991

The paper examines the features of interaction between the central government and the regions within the RSFSR (oblasts, krais), the status of which implied direct subordination of the regional authorities to the central government, at the final stage of the Soviet Union. A detailed analysis of the first steps in creating the institute of presidential representatives, as well as the problems that hampered its functioning, is carried out. The results obtained are correlated with the main tasks of «shock therapy» to assess the conditions for implementing radical market reforms. The formulation of the problem and revision of the existing scientific concepts based on the inclusion of sources that have not been previously introduced into scientific circulation predetermine the scientific novelty of the work. An appeal to the office documentation of government bodies made it possible to identify a vast discrepancy between law enforcement practice and the legislation in force during the period under study in matters of organizing the work of the executive vertical. The regions within the RSFSR were excluded from the unified management system, and the policy of the leadership of the territories and regions turned out to be inconsistent with the general state course. An attempt to overcome this problem by creating an institution of presidential representatives by the end of 1991 did not yield significant results, since it did not receive the necessary personnel, organizational and resource support. It did not allow the country's leadership to overcome the trends of destruction of a unified economic space and increased social tension. Under these conditions, the success of the government's stabilization and reform efforts turned out to be unattainable in the short term.

Optimization method for renewable energy investment planning in the electricity carbon coupling market environment considering economy

China is developing rapidly in renewable energy development, electricity market reform, and carbon market construction, using market mechanisms for efficient planning and investment. The electricity and carbon markets are interrelated for market entities. This context has led to a dual-level optimization model for renewable energy investment planning, considering cost recovery and new power system goals. The model includes deriving electricity carbon coupling quotations for conventional units based on dynamic carbon emission characteristics and proposing an electricity spot market mechanism influenced by carbon quota trading. The model’s upper level maximizes renewable energy investment capacity, determining its size and location, while the lower level simulates electricity spot and voluntary emission reduction market trading to guide investment decisions. The model transformed into a mixed integer linear programming problem for optimal solutions was validated numerically, examining various factors affecting optimal renewable energy investment capacity.

Labour market reforms, institutional complementarity and the insider–outsider wage gap

Abstract This article provides long-term evidence on how wage differentials between permanent and temporary workers are shaped by institutions that play a key role in labour market dualism, i.e. industrial relations, employment protection legislation and unemployment benefits. A two-step multilevel approach with fixed effects is employed using EU-SILC data for 25 European countries spanning up to 17 years (waves 2004–2020, N = 397) to estimate the moderating effects of several institutions and their interactions on the wage gap by contract type and across the whole wage distribution. The results show that more insider-oriented institutions tend to widen wage differentials and that the impact of institutional reforms on the wage gap varies greatly with the given institutional context. Overall, policy trends towards flexibilization risk widening insider–outsider divides due to accumulating labour market risks for temporary workers, thus increasing labour market segmentation by contract type.

Flexible labor, innovation regimes and the erosion of the Japanese model: Evidence from the Basic Survey on Wage Structure

Due to labor market reforms around 2003–4, Japan has a growing group of ‘non-regular’ workers who are easy to fire, and have poor carrier perspectives. This marks a break with the traditional Japanese model of life-time employment that allowed for intensive in-company training and commitment of personnel. Drawing from a national wage structure survey, we find indications that employment of non-regular workers has a negative impact on productivity (proxied by wages), this negative impact being largest under innovation regimes that require a high cumulativeness of knowledge. Our findings are consistent with neo-Schumpeterian research in Europe which concluded that certain labor market rigidities, while being undesirable from a neoclassical perspective, can be useful to innovation. Our paper confirms the impression from earlier research that structural reforms of labor markets along supply-side lines are likely to be one of the reasons for a substantial decline of productivity growth in major OECD countries since about 2004/05.

Energy, economic, and environmental impacts of electricity market-oriented reform and the carbon emissions trading: A recursive dynamic CGE model in China

Electricity market-oriented reform and carbon emissions trading, as the main policies implemented in China's power sector, have a profound impact on China's green and low-carbon transition by promoting resource allocation efficiency and internalizing external environmental costs, respectively. Therefore, this paper constructed a dynamic recursive CGE model to measure the energy, economic, and environmental impacts of carbon emissions trading and electricity market-oriented reform from electricity market structure and pricing mechanism. The results show that the two policies have a synergistic effect on industrial structure optimization, energy consumption structure optimization, and carbon emission reduction. Specifically, the share of value-added of the tertiary sector, the growth rate of coal consumption, the share of thermal power consumption, and carbon emissions in 2030 are reduced by 5.70 %, 18.29 %, 2.55 %, and 2.838 trillion tons, respectively, compared with the scenario without carbon emissions trading and electricity market-oriented reform. However, imperfectly competitive market structures outperform perfectly competitive market structures in energy consumption structure and carbon emission reduction. Electricity price regulation is also more beneficial to GDP growth and increase in residential disposable income compared to price liberalization. To this end, returning emission trading scheme revenues to residents can effectively mitigate the adverse impacts caused by market-oriented reforms.

Financial sector development and industrialization: lessons and prospects for Ethiopia

ABSTRACT A functional and efficient financial sector is essential for the industrial advancement of a nation. In the context of Ethiopia’s rapidly growing economy, this study examines the limitations imposed by its underdeveloped financial sector on the country’s economic advancement and explores viable policy interventions. Characterized by state-owned bank dominance, a scarcity of non-bank financial institutions, and deficient infrastructure, Ethiopia’s financial system perpetuates widespread financial exclusion. This exclusion hinders industrial transformation, stifles local business growth, and narrows financing avenues for foreign entities. Insights from China’s shift toward market-oriented financial reforms and Kenya’s fintech innovations suggest a path for Ethiopia involving clear, gradual reforms. Strategic steps could include diversifying financial institutions, improving financial infrastructure, advancing mobile payment solutions, and adopting more versatile financing methods to address the financial challenges of industrialization.

Transformation of the Ukrainian Stock Market: A Data Properties View

This paper investigates the evolution of the Ukrainian stock market through an analysis of various data properties, including persistence, volatility, normality, and resistance to anomalies for the case of daily returns from the PFTS stock index spanning 1995–2022. Segmented into sub-periods, it aims to test the hypothesis that the market’s efficiency has increased over time. To do this different statistical techniques and methods are used, including R/S analysis, ANOVA analysis, regression analysis with dummy variables, t-tests, and others. The findings present a mixed picture: while volatility and persistence demonstrate a general decreasing trend, indicating a potential shift towards a more efficient market, normality tests reveal no discernible differences between analyzed periods. Similarly, the analysis of anomalies shows no specific trends in the market’s resilience to the day-of-the-week effect. Overall, the results suggest a lack of systematic changes in data properties in the Ukrainian stock market over time, possibly due to the country’s volatile conditions, including two revolutions, economic crises, the annexation of territories, and a Russian invasion leading to the largest war in Europe since WWII. The limited impact of reforms and changes justifies the need for continued market reform and evolution post-war.

Internal migrants, skill complementarity and wage premium for local workers: a micro econometric analysis of Chinese households

China’s rapid urbanization has been driven by large-scale internal migrants, and it is worth exploring the impact of internal migrants on local labor markets. Based on data from China’s population census, population sample survey and urban household survey, this study empirically tests the wage premium effect of internal migrants on local labor, and further investigates the mechanisms of wage premium from skill complementarity, as well as the policy adjustment effect of labor market reforms. The results show that: (1) The wage premium effect originating from migrants is significant, and gradually decreases over time and with the increase of local worker wages. (2) The wage premium effect is more prominent in large cities, mega and super-sized cities, which can be explained by economic agglomeration and division of labor induced by skill complementarities. (3) Labor market-oriented reforms contribute to enhancing the wage premium effect, with marginal effects of 3.71% and 3.64%.

The Role of Corruption, FDI, and Unemployment in ASEAN-5 Economic Growth

Corruption is a global issue that remains unresolved to this day. It can lead to a decrease in investment and inefficiency in government spending allocation, impacting economic growth. Therefore, controlling corruption is a crucial issue that cannot be underestimated. This study uses panel data from 2012 to 2022 in ASEAN-5 countries (Indonesia, Malaysia, Vietnam, Laos, and Thailand). The method used is panel data regression with a fixed-effect model (FEM). The results indicate that foreign direct investment (FDI) has a significant positive effect on economic growth, while the corruption perception index and unemployment have no significant impact in the ASEAN-5 countries. This study suggests that promoting FDI is key to ASEAN-5's economic growth. Additionally, addressing corruption and unemployment through governance and labor market reforms is also crucial for sustainable development in the region.

IPO suspensions and labor employment decisions: Evidence from China

The Chinese regulator occasionally suspends all initial public offerings (IPOs) to maintain stability in the capital markets and facilitate capital market reform. These suspensions temporarily prevent firms that have obtained IPO approval from going public. We hypothesize that this suspension-induced listing delay influences firms’ labor employment decisions. Consistent with this argument, we find that a suspension-induced listing delay is associated with an increase in labor costs, both in terms of total and average employee payments. This positive relationship is more pronounced for human capital-intensive firms and non-state-owned enterprises. We also find that there is an increase in employment and employee turnover for firms facing suspension-induced listing delays. Moreover, IPO suspensions result in lower labor productivity and firm performance. Overall, our results indicate that government policy uncertainty leads firms to incur high labor costs and reduces capital allocation efficiency.

Dynamic interaction between permanent and temporary employment across manufacturing labor markets in the Mexican states: A structural panel VAR approach

México’s implementation of several labor market reforms aimed to stimulate the flexibilization of labor relationships have brought long-standing concerns among scholars and governmental authorities about a displacement process of permanent by temporary jobs. In this regard, this manuscript aims to respond whether the dynamic interaction between permanent and temporary employment across Mexican states describe a substitution or complementary relationship. By means of implementing a structural panel vector autoregressive model, our estimation results demonstrate that a combination of both types of interaction, substitutive and complementary ones, prevail across manufacturing labor markets at state level. Moreover, a marked heterogeneity among estimated dynamic responses suggests that incentivizing permanent employment would induce stronger substitution effects on its temporary counterpart than, for example, substitution of permanent job positions arising when incentivizing temporary employment.

Design of distributed trading mechanism for prosumers considering the psychological gap effect in community electricity markets

With the large-scale customer-side development of distributed energy and continuous advancements in power market reform, the market-oriented trading of distributed power generation with the participation of prosumers has gradually become an important solution to promote the consumption of distributed energy. In addition, prosumers exhibit obvious bounded rationality characteristics; therefore, the design of efficient and reasonable trading mechanisms determines the efficiency of the market. From this perspective, a distributed electricity market trading mechanism based on the Stackelberg game is proposed for the community electricity trading market, with multiple prosumers participating in the distribution side. Firstly, the trading architecture of the community electricity market was established under the distribution network level. Secondly, the pricing strategy of the distribution network operator and the quantitative strategy of community prosumers were analysed; on this basis, the characteristics of the bounded rationality of prosumers were considered, and the impact of the psychological gap effect of prosumers on their energy utility was introduced into the objective function of prosumers. This facilitated the construction of a Stackelberg game model in which distribution network operators lead and community prosumers follow. Thirdly, the Stackelberg equilibrium was proven to exist and be unique, which was then solved by the distributed algorithm – combining the evolutionary algorithm and quadratic programming – which improves the solution efficiency and effectively protects the privacy of prosumers. Finally, the effectiveness and feasibility of the proposed trading mechanism were verified through numerical examples.