We investigate the impact of financial geographic density on corporate financial asset holdings in emerging market. We proxy for financial geographic density by calculating the number of financial institutions around a firm within a certain radius based on the geographic distance between the firm and financial institutions. Using data on publicly listed A-share firms in China from 2011 to 2021, we find that financial geographic density has a positive impact on nonfinancial firms’ financial asset investments, especially for the firms located in regions with a larger number of banking depository financial institutions or facing greater market competition. An increase in the number of financial institutions surrounding firms increases corporate financial asset holdings by alleviating information asymmetry. Moreover, we document that Fintech has little impact on the relationship between financial geographic density and corporate financial asset holdings. As the rise of financial geographic density, firms hold more financial assets for precautionary motives, which contribute to corporate innovation.

Using three natural experiments, we test the hypothesis that investor overconfidence produces overpricing of high idiosyncratic volatility stocks in the presence of binding short-sale constraints. We study three events: IPO lockup expirations, option introductions, and the 2008 short-sale ban on financial firms. Consistent with our prediction, we show that when short-sale constraints are relaxed, event stocks with high idiosyncratic volatility tend to experience greater price reductions, as well as larger increases in trading volume and short interest, than those with low idiosyncratic volatility. These results hold when we benchmark event stocks with non-event stocks with comparable idiosyncratic volatility. Overall, our findings suggest that biased investor beliefs and binding short-sale constraints contribute to idiosyncratic volatility overpricing.

As China’s shadow banking sector expands, the impact of listed companies’ involvement in financial stability and the real economy accumulates increasing attention. Despite being a crucial channel for non-financial firms to participate in shadow banking, the literature has given limited consideration to the acquisition of wealth management products (WMPs). Using data from Chinese listed firms between 2007 and 2020, we analyze how excessive equity financing affects companies’ WMP acquisitions. Our findings indicate that over-financing significantly boosts WMP purchases among these firms, particularly in cases of private ownership, raised environmental uncertainty, and strict financing constraints.

The asymmetric dissemination of information among financial firms in the financial market reflects their asymmetric response to the dissemination of both positive and negative information. However, it is worth studying whether this asymmetry will intensify or alleviate under different financial market conditions. Based on high-frequency minute stock price data of Chinese A-share listed financial firms from July 2020 to July 2023, we decompose the good and bad information, as well as the positive and negative volatility information in the return series. We utilize the quantile cross-spectral correlation method to construct an information overflow network at monthly intervals. We use the MVMQ-CAViaR model to estimate the value at risk (VaR) for various quantiles and build a risk spillover network that incorporates both positive and negative tail risk information, using the quantile dynamic SIM-COVAR-TENET model. We calculated the network dissemination efficiency of both good and bad information, including average speed, speed deviation, densest speed, and depth, to explore the changes in the asymmetry of good and bad information dissemination under different financial market conditions. We get that when the financial market is booming, financial firms’ asymmetric response to good and bad information will increase, and the firms will pay more attention to bad information. When the financial market declines, the asymmetric response of financial firms to good and bad information is diminished, and their sensitivity to both positive and negative information is heightened. In addition, the dissemination of bad information by firms in the five sub-financial industries across various markets exacerbates the asymmetric response of other financial firms to good and bad information. More importantly, the release of positive return information, negative volatility information, and highly negative tail risk information by the real estate financial firms all impact the asymmetric response of financial firms to good and bad information in a prosperous financial market. In recessionary financial markets, financial regulators can strategically release positive information to mitigate the decline in the financial market. Conversely, in a booming financial market, financial regulators should be cautious of the negative impact that bad information can have on financial firms, particularly in relation to the excessive growth of the real estate sector and the potential chain reaction of significant adverse events.

The asymmetric dissemination of information among financial firms in the financial market reflects their asymmetric response to the dissemination of both positive and negative information. However, it is worth studying whether this asymmetry will intensify or alleviate under different financial market conditions. Based on high-frequency minute stock price data of Chinese A-share listed financial firms from July 2020 to July 2023, we decompose the good and bad information, as well as the positive and negative volatility information in the return series. We utilize the quantile cross-spectral correlation method to construct an information overflow network at monthly intervals. We use the MVMQ-CAViaR model to estimate the value at risk (VaR) for various quantiles and build a risk spillover network that incorporates both positive and negative tail risk information, using the quantile dynamic SIM-COVAR-TENET model. We calculated the network dissemination efficiency of both good and bad information, including average speed, speed deviation, densest speed, and depth, to explore the changes in the asymmetry of good and bad information dissemination under different financial market conditions. We get that when the financial market is booming, financial firms’ asymmetric response to good and bad information will increase, and the firms will pay more attention to bad information. When the financial market declines, the asymmetric response of financial firms to good and bad information is diminished, and their sensitivity to both positive and negative information is heightened. In addition, the dissemination of bad information by firms in the five sub-financial industries across various markets exacerbates the asymmetric response of other financial firms to good and bad information. More importantly, the release of positive return information, negative volatility information, and highly negative tail risk information by the real estate financial firms all impact the asymmetric response of financial firms to good and bad information in a prosperous financial market. In recessionary financial markets, financial regulators can strategically release positive information to mitigate the decline in the financial market. Conversely, in a booming financial market, financial regulators should be cautious of the negative impact that bad information can have on financial firms, particularly in relation to the excessive growth of the real estate sector and the potential chain reaction of significant adverse events.

This study investigates the nexus between investor protection and dividend policy for 517 listed non-financial firms operating in Asian countries between the 2008- 2017 period. The dynamic panel data model (System-GMM) reveals that stronger investor protection is associated with higher dividend payouts, and firms increase dividends, specifically in response to the rise of the extent of disclosure and director liability and also ease of shareholder suits. Besides, the results highlight that firms pay out fewer dividends in cases of growth opportunity particularly in environments with stronger investor protection, more developed financial market, and common-law system. Results are robust when alternative specifications are implemented.

The advantages and disadvantages of universal banking have long been debated. Using the successive granting of lead underwriter qualifications to commercial banks in China as a quasi-natural experiment, we study the impact of universal banking on non-financial firms’ investment decisions. We find that after a firm’s main lending banks qualify as lead underwriters, the firm’s investment increases by 7.7 to 8.3 percent on a gross or net basis. The underlying mechanism is that universal banking can generate informational economies of scope and relax constraints on the provision of external finance. In contrast, we find no evidence on the conflict of interest between universal banks and their customers. Our study, therefore, sheds light on the potential gains from universal banking.

In this paper we compare counterfactual corporate bond issuing dates to actual issuing dates in order to test the ability of firms to time the credit market. The 50 most active bond issuing financial firms and the 50 most active industrial firms are studied using one week, one month, and one quarter windows. The ability to time firm-specific CDS prices is studied from January 2002 - October 2009. The ability to time the risk-free rate (10 year US government bond) is studied from January 1988 - October 2009. We find that: firms do not successfully time the risk-free rate or the credit spreads. There is no evidence of CDS timing ability over one week or one month, but there is some borderline evidence at one quarter. For a typical bond issue, the firm loses about 1% of the face value of the bond relative to a 1 month window, due to their inability to time the market. If the firms could improve their market timing, they could save many hundreds of millions of dollars. Since there is a degree of statistical predictability in the data, we find it surprising that these firms are not able to do a better job of timing the credit market.

Abstract Universal corporate banks are defined as financial institutions that may offer the entire range of financial services, and own equity in financial and non-financial firms. The emergence of universal corporate banks is one of the responses of banks to the environmental changes in global financial markets. An idealized model of corporate bank is developed to describe the nature of corporate bank. The corporate banking policies include internationalization of financial services and information net-work, expansion and integration of corporate banking functions, creating close corporate clients relationship, acquiring knowledge and information advantage in corporate and financial markets, performance of corporate control and corporate governance to influence corporate management. Transaction cost and other theories are used to explain the universal corporate bank, especially the rationale for expansion and r-organization, for developing close corporate relationship, for acquiring information and knowledge of corporate clients, and the influence concerning corporate governance. In this study, the evolution of regulation, present situation of banking system, future development of corporate banking in some countries are investigated. It is found that free selection of organizational structure and financial activities of financial institutions is a general tendency in these countries. The problems such as conflicts of interest, culture conflict encountered when implementing corporate banking policies are discussed in this study. Different organization designs, management models, external regulations, and corporate culture are introduced as solutions. The development of corporate bank has great implications for financial reform in China. The pre-requisitions and barriers of developing universal corporate in China are discussed. A case study of China Construction Bank is utilized to illustrate the current situation and further development of banks in China. It is argued that a gradually financial liberalization with correct order should be accomplished. Some recommendations are produced for further reform of financial market in China including diversification of bank’s ownership, permission of foreign banks enter Chinese financial market, liberalizing interest rate, and establishing a fully floated foreign exchange market.