The increasingly competitive environment in the financial services market has resulted in pressure to develop and utilize alternative delivery channels. A growing phenomenon in financial services is the use of the Internet as a channel for financial services in many countries and there is wide agreement that this channel will have a significant impact on the banking system. The vast opportunities brought by the Internet to the banking industry have therefore attracted much attention from researchers. This study aims to analyze the role, adoption and barriers of Internet banking in the banking system in China. Using a quantitative approach, this study surveyed a sample of senior manager in three major cities namely, Hangzhou, Shenzhen and Chengdu. Using a number of statistical analyses including analysis including T-test, ANOVA, Factor Analysis and Chi Square Test, The study finds that the main role of Internet banking in China is to Increase to Market Share. Another important finding is to Increase profitability. Maintain Competitive Edge and Improve customer service are the main reasons for the adoption of Internet banking by Chinese banks. However, it appears that Security risk constitutes the main barrier to Internet banking.

This paper investigates the hedging effectiveness of the Copper Futures contracts using daily settlement prices for the period from 23 July, 2008 to 3 July, 2009. Different econometric models are used to estimate the optimal hedging ratios of Copper Futures on the Shanghai Futures Market. The hedging performance is firstly analyzed by the OLS regression model, the Error Correction model (ECM) and the Bivariate-GARCH Model. Then the Minimum-Variance Hedge Strategy is adopted to evaluate the statistical models. Secondly this research uses a non-parametrical method, the Genetic Algorithms to predict the hedging ratio based on the historical data. Then finally whether the Genetic Programming could produce better hedging parameters than the standard hedging model will be revealed.

In this paper, on the premise that the expropriation of corporate assets by controlling shareholders would generate a residual loss, we studied how the laws of investor protection influenced on the decentralization of corporate ownership, the penalty and the cost of litigation. There are several interested conclusions we reached. At first, the effective protection of minority shareholders will lead to the decentralization of ownership, which is irrelevant to whether there is litigation cost or who should pay the cost. Second, if litigation costs remain unchanged, effective minority shareholder protection laws will evolve along a self-reinforcing path. On the other hand, if the penalty remains unchanged, effective minority shareholder protection laws will cause litigation costs to increase over time. These conclusions are irrelevant to who pays the litigation cost. Last, pay the cost by minority shareholders or controlling shareholders will cause litigation costs to increase or decrease with the penalty.

Based on a compound random process including geometric Brownian motion and Poisson process, we established a model which can describe the environmental uncertainty more flexible. And then, we use a stochastic optimal control model to address the issue of resource allocation. Our study conclusions indicate the following: (1) if rare events can be described using a Poisson process, then the fixed-point theorem can be used to solve resource allocation scheme; and (2) if a certain asset or a certain department’s facing a rare event leads to a reduction in value, then the rare event will not only affect investment in this asset or department but will also have ramifications for investment in related assets or departments. After that, we briefly discuss the resource allocation issues of financial institutions and manufacturing enterprises. The results show that the uncertain, flexible environmental of financial institutions can improve the efficiency of asset allocation. Manufacturing companies can respond effectively and positively to such uncertainty through a flexible asset allocation strategy. The contribution of our paper lies mainly in its use of new methods to describe uncertainty. When we re-define the environment of uncertainty, the flexible resource allocation scheme can effectively mitigate the impact of random adverse effects of the environment. In addition, if the description methods are closer to the facts themselves, then the scheme for flexibility in resource allocation may also bring about an excess return.

In this paper, based on Acharya and Pedersen’s [Journal of Financial Eco- nomics (2006)] overlapping generation model, we show that liquidity risk could influence the market risk forecasting through at least two ways. Then we argue that traditional liquidity adjusted VaR measure, the simply adding of the two risk measure, would underestimate the risk. Hence another approach, by modeling the liquidity adjusted returns (LAr) directly, was employed to incorporate liquidity risk in VaR measure in this study. Under such an approach, China’s stock market is specifically studied. We estimate the one-day-ahead “standard” VaR and liquidity adjusted VaR by forming a skewed Student’s t AR-GJR model to capture the asymmetric effect, non-normality and excess skewness of return, illiquidity and LAr. The empirical results support our theoretical arguments very well. We find that for the most illiquidity portfolio, liquidity risk represents more than 22% of total risk. We also find that simply adding of the two risk measure would underestimate the risk. The accuracy testing show that our approach is more accurate than the method of simply adding.

This paper investigates the impacts of background risk on investors’ portfolio choice in a mean-variance framework and analyzes the properties of the selected portfolio and investors’ hedging behaviour. Our model implies that the optimal portfolio with background risk can be separated into two independent components: the traditional mean-variance optimal portfolio and the self-financing portfolio constructed to hedge against background risk. Our results show that both the composition and risk of the optimal portfolio are greatly affected by a number of background risk factors, including the quantity and risk of the assets that are exposed to background risk, as well as the correlation between background assets and those in the portfolio.

This paper investigates CEO pay and pay-performance relationship in China’s listed firms. We distinguish four firm types based on their controlling owners: state owned enterprises affiliated with state asset management bureaus (SAMBs), state owned enterprises affiliated with the central government (SOECGs), state owned enterprises affiliated with a local government (SOELGs), and private firms controlled by private investors. We also distinguish between firms with foreign investors and those without. Because the different types of controlling owners have different objectives, motivations, and political interests, they affect managers’ compensation in the firms in which they invest. Our results indicate that CEO pay is lowest in SAMB controlled firms and highest in SOECG controlled firms. Not only is CEO pay positively associated with firm performance, the positive pay-performance relationship is stronger in both types of SOE firms but weaker in privately controlled firms. In addition, firms with foreign investors compensate their CEOs more highly than those without foreign investors, an effect that is significant in both SOEs and privately controlled firms. Overall, the evidence suggests that CEO compensation in China is jointly determined by firm performance, market-oriented reform and the unique ownership structure, meaning that standard theories of efficient compensation contracts may not apply in such emerging markets.

The People’s Republic of China has taken substantial steps to reform its financial system, especially the banking sector, since 1995. The speed of banking reform has accelerated after China joined the World Trade Organization (WTO) in December 2001. This study examines the impact of recent banking reforms and of WTO accession on the cost efficiency of the Chinese banking sector. We use a non-parametric approach to investigate the efficiency trend and productivity growth of banks in China between 1998 and 2006. We also compare the efficiency and productivity growth of different banking ownership groups prior to and after joining the WTO. We find that, on average, domestic banks outperform their foreign counterparts over the sample period in terms of overall and allocative efficiency, but they fall behind in terms of overall technical efficiency. The comparison of efficiency indexes pre and post WTO accession reveals that the efficiency of domestic banks has declined post accession, while foreign banks have enjoyed an improvement rise in their cost efficiency post WTO accession in 2001.The findings of this study further suggest that the total factor productivity of Chinese banks has weakened over the period under study. However, a pre and post analysis of WTO accession results shows that total factor productivity has improved for both domestic and foreign banks after China joined the WTO, equally owing to efficiency improvement and technological progress

The People’s Republic of China has taken substantial steps to reform its financial system, especially the banking sector, since 1995. The speed of banking reform has accelerated after China joined the World Trade Organization (WTO) in December 2001. This study examines the impact of recent banking reforms and of WTO accession on the cost efficiency of the Chinese banking sector. We use a non-parametric approach to investigate the efficiency trend and productivity growth of banks in China between 1998 and 2006. We also compare the efficiency and productivity growth of different banking ownership groups prior to and after joining the WTO. We find that, on average, domestic banks outperform their foreign counterparts over the sample period in terms of overall and allocative efficiency, but they fall behind in terms of overall technical efficiency. The comparison of efficiency indexes pre and post WTO accession reveals that the efficiency of domestic banks has declined post accession, while foreign banks have enjoyed an improvement rise in their cost efficiency post WTO accession in 2001.The findings of this study further suggest that the total factor productivity of Chinese banks has weakened over the period under study. However, a pre and post analysis of WTO accession results shows that total factor productivity has improved for both domestic and foreign banks after China joined the WTO, equally owing to efficiency improvement and technological progress

Spatial imbalance of technology, which refers to unevenness or disproportionality in a spatial distribution of technology, is of key importance in the harmonious and balanced development of the world economy. This study is an attempt to develop a comparable map-independent analysis that measures spatial distribution, deviation angle, shift distance, direction and velocity of the gravity center (location-related spatial imbalance analysis) from an international range. Analyzing respectively on the gravity centers of different attribute values of 44 countries or regions and studying on the effects of the gravity centers of GDP, FDI and population on the technology center of gravity, it comes to the following conclusions: (1) the imbalance of spatial distribution is existing and will lasts for a long time; (2) the spatial distributions of GDP, FDI, and population don’t coincide with that of technology in longitude and latitude only except that the latitude distribution of FDI coincide with latitude and longitude distribution of technology; (3) the distributions of gravity centers of technology and population approximately record a south-east extending; (4) the distributions of gravity centers of GDP and FDI take on a loop-line movement with a clockwise rotation; (5) the gravity centers of GDP, FDI, population are positively associated with the gravity center of technology in latitude rather than in longitude. (6)Besides, the average velocity of different gravity centers is approximately 300km per year except that the gravity center of GDP shifts at an average speed of a little more than 9km per year. Combining analyses of the spatial distribution, deviation angle, shift distance, direction and velocity with the calculation of the coordinates’ correlation coefficients of the gravity centers, the hypotheses are partially supported. This study provides insight into the possible relationships between spatial distribution of technology, harmonious economic development and population spatial shift, and generates some interesting avenues for future research.