This paper aims to investigate the transmission mechanism through which trade policy uncertainty (TPU) impacts bank risk-taking via firms’ capital market performance. The research reveals that TPU significantly affects firms’ capital market performance, leading to reduced stock liquidity, increased stock price crash risk, decreased stock price synchronicity, and lower stock returns. These effects are transmitted to bank risk-taking, resulting in an overall increase in banks’ passive risk-taking and a decrease in their willingness to undertake active risk-taking. Furthermore, we discover that the impact of TPU on bank risk-taking varies across different categories of firms, revealing heterogeneity in this transmission process. This study uncovers the critical mechanism through which TPU propagates in financial markets, offering important theoretical insights and policy implications for understanding and managing financial risk.

This study investigates whether and how corporate social responsibility (CSR) affects stock liquidity. Utilizing panel data from 3,366 Chinese enterprises spanning 2010 to 2021, empirical findings suggest that CSR endeavors facilitate an uplift in stock liquidity. Specifically, a 1% increase in CSR score will improve stock liquidity by 0.128%. The research further reveals that media coverage and corporate operations are crucial channels for CSR to affect stock liquidity, with the former playing a more dominant role. Notably, the bolstering effect of CSR on stock liquidity is amplified during periods of increasing economic policy uncertainty. Heterogeneity analysis reveals that the influence of CSR on stock liquidity is particularly salient in state-owned enterprises. Additionally, different CSR subcategories (shareholder responsibility, employee responsibility, and social responsibility) vary in their effect on stock liquidity. Shareholder and employee responsibilities both enhance stock liquidity, with the impact of shareholder liability being particularly pronounced.

The existing literature studies the relationship between institutional investors and the risk of stock price crash from multiple dimensions. Based on the phenomenon that institutional investors hold the shares of several listed companies in the same industry, this paper takes the A-share listed companies in Shanghai and Shenzhen stock markets from 2008 to 2018 as the research samples to explore the relationship between institutional common ownership and stock price crash risk. The results show that: institutional common ownership significantly increases the risk of stock price crash. After a series of robustness tests, the conclusion remains unchanged. The impact mechanism test shows that institutional common ownership improves the stock price synchronization, investor sentiment and stock liquidity, and then aggravates the risk of stock price crash. Further tests show that the higher the product market competition, the more media coverage, and the weaker the protection of regional investors, the positive impact of institutional common ownership on the risk of stock price crash is more significant.

This paper examines whether foreign investor heterogeneity plays a role in stock liquidity on a sample of 27,976 firms from 39 countries for the period from 2003 to 2009. Results show that foreign direct ownership is negatively, while foreign portfolio ownership is positively, associated with various measures of stock liquidity. Furthermore, liquidity also reduces more (less) in firms with larger foreign direct investment FDI (foreign portfolio investment, FPI) during the 2008 market downturn. As predicted by finance theory, foreign investors influence stock liquidity through both trading activity and information channels. Our findings also indicate that the presence of FDI investors improves firm valuation and operating performance even at the expense of an increase in the firm’s cost of capital, suggesting that the value-enhancing benefits from FDI investors’ monitoring efforts outweigh the liquidity costs and high adverse selection premium demanded by less informed investors. In contrast, the positive impacts of FPI ownership on firm performance, as previously documented in existing literature, becomes negative and also not robustly significant after controlling for liquidity.