This study investigates the relationship between gender diversity on the board and dividend payouts in China using a large sample over the period 2003–2017. Our results provide robust and strong evidence showing that gender diversity on the board is positively associated with cash payments of dividends. The empirical outcomes confirm that gender diversity on the board facilitates corporate governance and subsequently promotes dividend payouts. We demonstrate that gender diversity on the board has the greatest effect when the board has critical mass participation (three or more female directors) compared with only their token participation. However, independent female directors increase dividend payouts, while female executive directors do not have a significant impact. Furthermore, we extend the literature on the relationship between dividend payments and government ownership by providing evidence that gender diversity has a higher impact on dividend payouts for state-owned enterprises than non-state-owned enterprises. After controlling the endogeneity problems, our findings are reliable and robust.

Stock market trading restrictions affect stock prices and liquidity directly through constraints on investors’ transactions and indirectly by altering the information environment. We isolate this indirect effect by analyzing how stock market restrictions affect corporate-bond prices. Exploiting the staggered relaxations of trading restrictions in the Chinese stock market as a quasi-natural experiment, we document that the easing of trading restrictions on a firm’s stock decreases the credit spread of its corporate bond. This effect is stronger for firms with less transparency or lower credit ratings. Our evidence suggests that the effect is likely due to improved stock price informativeness.

This paper studies the magnet effect of market-wide circuit breakers and examines its possible forms using high-frequency data from the Chinese stock index futures market. Unlike previous studies that mainly analyzed the price trend and volatility, this paper is the first to consider the intraday price jump behavior in studying the magnet effect. We find that when a market-wide trading halt is imminent, the probability of a price decrease and the level of market volatility remain stable. However, the conditional probability of observing a price jump increases significantly, leading to a higher possibility of triggering market-wide circuit breakers, which is in support of the magnet effect hypothesis. In addition, we find a significant increase in liquidity demand and insignificant change in liquidity supply ahead of a market-wide trading halt, suggesting that the deterioration of market liquidity may play an important role in explaining the magnet effect.

Using a comprehensive dataset of Chinese corporate bond issuances, we uncover substantial evidence of issuance overpricing: the yield spread of newly issued bonds at their first secondary-market trading day is on average 5.35 bps higher than the issuance spread. This overpricing is robust across subsamples of bond issuances with different credit ratings, maturities, issuance types, and issuer status. We further provide extensive evidence to support a hypothesis that competition among underwriters drives this overpricing through two specific channels—either through rebates to participants in issuance auctions or through direct auction bidding by the underwriters for themselves or their clients.

Studying China’s credit market, we find improved price efficiency and, paradoxically, worsening segmentation as perceived government support for state-owned enterprises (SOEs) caused non-SOE credit spreads to explode rather dramatically relative to their SOE counterparts amid government-led credit tightening. Interestingly, the post-2018 credit-market stress helped improve price efficiency within non-SOEs, while SOEs saw no such improvement and instead became sensitive to issuer-level measures of government support, marking a shift of SOE premium beyond the SOE label. We further document the real impact of the deepening credit misallocations: non-SOEs in aggregate are losing their long-standing advantage in profitability over SOEs in China.

This paper studies the economic impact of the emergence of FinTech platforms on financial intermediation. In China, platform distributions of mutual funds emerged in 2012 and grew quickly into a formidable presence. Utilizing the staggered fund entrance onto platforms, we find markedly increased flow sensitivities to performance. Akin to the winner-take-all phenomenon in the platform economy, net flow captured by top 10% performing funds more than triples its pre-platform level. This pattern of platform-induced performance chasing is further confirmed using private data from Howbuy, a top platform in China. Consistent with this added incentive of becoming top performers in the era of large-scale platforms, fund managers increase risk taking to enhance the probability of becoming top performers. Meanwhile, organizational cohesiveness of fund families weakens as platforms level the playing field for all funds.

We examine whether investor behavior can be influenced by the social norms to which they are exposed. Specifically, we test two competing hypotheses regarding the influence of social trust on the disposition effect related to mutual fund investment. On the one hand, a higher level of social trust may elicit stronger investor reactions by increasing the credibility of the performance numbers reported by funds. This results in higher flow-performance sensitivity, which mitigates investors’ tendency to sell winners and hold onto losers. On the other hand, societal trust may reduce concerns about expropriation, thereby weakening investors’ need to react to poor performance. The resulting lower flow-performance sensitivity increases the disposition effect. Based on a proprietary dataset of complete account-level trading information for all investors in a large mutual fund family in China, we find compelling evidence 1) of a significant disposition effect among fund investors; 2) that a higher degree of social trust is associated with higher flow-performance sensitivity; and 3) that (high) trust-induced flows mitigate the disposition effect. Our results suggest that, in addition to cognitive biases, investor behavior is also strongly influenced by social norms.

We study the consequences of market uncertainty on international trade. An increase in foreign market uncertainty dampens China's aggregate exports on both the extensive and intensive margins. The adverse effects are more pronounced in industries facing tighter financial constraints than in others. We propose a dynamic trade model to explain the facts. Greater uncertainty depresses a firm's expected value of exporting and borrowing capacity, leading to fewer exporters and a smaller average size of exports. Under calibrated parameters, the uncertainty shock accounts for a sizable fraction of China's trade collapse in the 2008 financial crisis and the recent trade war.

In this paper, we examine the spillover effect of US monetary policy uncertainty (MPU) on China's real economic activities, and study the international transmission mechanisms of MPU shock from the view of financial integration, on both aggregate and firm level. Based on the macro level evidences, we find that an increase in US MPU will depress not only domestic output but also the real economic activities in China. The international spillover effect of US MPU shock will be intensified when international financial markets get more integrated. The firm level evidence based on Chinese listed firms further corroborate the deflationary effect of US MPU shock. Theoretically, we build a two-country New Keynesian DSGE model featuring monetary uncertainty shocks to confirm the empirical evidences.

In view of the growing importance of P2P lending in China, we investigate the role of the level of education of a borrower on the demand for funding. We collect and analyze data for more than 10,000 transactions obtained from Renrendai.com, a popular P2P company operating in China. Our analysis indicates that individuals with higher levels of education demand smaller loans for any given interest rate and lower interest rates for any given loan amount, controlling for a variety of factors. This finding applies to individuals demanding both personal and business loans. The same result holds, moreover, when an individual’s credit information is available to a P2P company online. Several robustness tests confirm our basic empirical findings.