Table of Content

16 April 2020, Volume 40 Issue 3

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OPTIMIZING FINANCIAL SUPPLY STRUCTURE AND FORESTALLING LIQUIDITY RISK

WANG Guogang

2020, 40(3):  4-17. 

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Since 2018, there have emerged three correlated dilemmas in the economy and finance in China: the contradiction between deleveraging and maintaining growth, the contradiction between distracting the capital from its intended purpose and turning the capital back to its intended purpose; the contradiction between financial regulation and forestalling financial risks. These dilemmas can hardly be resolved by loose monetary policies and injecting more liquidity into the economy and finance, which may even cause contrary effects. The solutions are as follows: expanding the commercial paper market, the bonds market and the stock market, and permitting residents and entity enterprises enter into the financial market as the capital suppliers and capital demanders; promoting the development of the asset management market, expanding the objects of financial services from legal entities to residents and families, and promoting the transformation of temporary idle capital of entity enterprises from deposits (especially fixedtime deposits) to cash management (or capital management); developing the behavior regulation mechanism and the regulatory sandbox mechanism basd on the negative list.

CAPITAL DEEPENING, EFFICIENCY OF RESOURCE ALLOCATION AND TOTAL FACTOR PRODUCTIVITY: FINDINGS FROM SMALL ENTERPRISES

SONG Jian1，ZHENG Jianghuai2

2020, 40(3):  18-33. 

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Researches have reached consensus that capital deepening promotes productivity improvement and resource misallocation and leads to reduced total factor productivity based on large and mediumsized enterprises, while few researches focus on on smallsized enterprises. This paper constructs a theoretical model between the three variables and uses data of small enterprises in Jiangsu Province for empirical test. This study finds that the impact of capital deepening on resource allocation efficiency is inverted Ushaped, while the impact of capital deepening on productivity is Ushaped. Enterprises with lowlevel or highlevel capital deepening can promote productivity by improving resource allocation efficiency, while enterprises with mediumlevel capital deepening have a suppression effect, which is more obvious in smallsized enterprises and lowtech industries. The rise in labor wage and interest rate in small emterprises will inhibit the efficiency of resource allocation, but increase productivity. The policy enlightenment is that while supporting the investment and financing of small and mediumsized enterprises, the government should give more support to their talents and employment policies.

EQUITY STRUCTURE, OWNERSHIP AND BOND FINANCING COST——Empirical Research Based on Chinese Listed Companies

LIU Gang，LI Jia，LIANG Han

2020, 40(3):  34-50. 

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 Using data of 984 corporate bonds issued by 503 listed companies over the recent decade, this paper empirically explores the influence of equity structure and ownership on bond financing cost. We find that the bond financing cost is positively correlated with equity concentration, while negatively correlated with equity restriction. Further examination finds that the impact of equity structure on bond financing cost is more significant in private companies than in stateowned companies, indicating a moderating role of ownership. This paper enriches the theory of corporate bond pricing, provides beneficial enlightenment for bond issuers to reduce bond financing cost, for bond investors to evaluate bond investment risks, and for government departments to improve bond market supervision.


RESEARCH ON THE DYNAMIC WARNING OF PROVINCIAL FINANCIAL RISKS IN CHINA——Based on the Monthly Sample Data Analysis of Zhejiang Province

ZHANG Anjun

2020, 40(3):  51-69. 

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Because of the extremely unbalanced development of China's regional economy, some provinces have great influence on the overall financial security of China, making it very important for the provincial and national financial security to pay attention to the risks of the provincial financial system and to carry out early warning and supervision. Under the background of further opening up of the financial market, this paper builds the leading early warning indicator system and the financial risk stress index of provincial financial risks in China. Using the provincial monthly sample data of Zhejiang Province from January 2004 to December 2016, this paper conducts an empirical analysis of early warning of provincial financial risks by TAR Vector Autoregressive Model and Ologit Probability Model. Results show that：(1) Inflation rate and export growth rate have significant and negative effects on provincial financial risks, while the new bank loans divided by industrial added value, fixed asset investment growth rate, consumption growth rate and import and export growth rate have significant and positive effects; (2) Financial stress risk of the previous month has a significant and negative effect on that of the current month, which makes the financial stress risk of the current month has some “smoothing” effect; (3) Statistical tests show that Dynamic Logit Early Warning Model is obviously better than Static Logit Early Warning Model in the model's overall significance, goodness of fit, and the accuracy of the prediction; （4） The early warning statistical analysis results of Zhejiang province in the recent 12 months show that strict interval of early warning accuracy is 25%, but the main class interval of early warning accuracy is 50%, and it is relatively better than early warning effect of domestic and foreign models of the same type.

THE EFFECT OF SOCIAL TRUST ON INDUSTRIAL COAGGLOMERATION

ZHOU Mingsheng，YU Guodong

2020, 40(3):  70-85. 

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Introducing social trust into the Free Capital Vertical Linkage model (FCVL), this paper constructs a model of social trust and industrial coagglomeration to study the innermechanism that social trust causes industrial coagglomeration. Theoretical analysis shows that the higher the degree of social trust is, the higher industrial coagglomeration level will be, and the greater economic contribution industrial coagglomeration will make. By pairing 19 kinds of manufacturing industry data in the inputoutput table of 30 provinces and cities in China, the above conclusion is verified though gradually adding control variables and overcoming endogeneity. Considering the differences in development level, this paper does regional heterogeneous study and finds that the marginal effect of social trust on industrial coagglomeration in eastern areas and highermarketization areas is significantly higher than that in middle and west areas and lowermarketization areas. Therefore, raising the level of regional social trust to promote industrial coagglomeration and highquality regional economic growth, especially the eastern areas and highermarketization areas, should be one of the priorities of local government.


BUSINESS STRATEGY AND CORPORATE INNOVATION#br#

YUAN Rongli，XIA Shengjie，WANG Huacheng

2020, 40(3):  86-98. 

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The formulation of business strategy affects the overall development of the company. Using a sample of Chinese listed firms for 2007-2016, we examine whether business strategy affects corporate innovation. We find that more radical business strategy is associated with higher level of corporate innovation. Further analysis suggests that the positive correlation between business strategy and corporate innovation becomes more significant when the companies are private or in highly competitive products market. Moreover, management incentive and risk tolerance appear to be underlying channels through which business strategy affects corporate innovation. Through the analysis of the impact of business strategy on corporate innovation, this paper plays a reference role for the management to make business activity plan and encourage corporate innovation.

THE INFLUENCE OF MANAGEMENT TONE ON CORPORATE BOND CREDIT SPREAD BASED ON TEXT MINING

YAO Xiao，WU Dongxiao，PANG Shoulin

2020, 40(3):  99-112. 

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We select nonfinancial companies that issue bonds in Shanghai and Shenzhen Ashare market from 2012 to 2017 as our sample and explore the influence of text tone on bond credit spreads. According to the characteristics of Chinese accounting textual disclosure, we have established a dictionary suitable for Chinese financial market accounting text analysis, and applied textual analysis to obtaining the tone of “Management Discussion and Analysis” in the annual reports of Ashare nonfinancial listed companies in China. Empirical results show that the more positive the accounting textual tone is, the smaller the bond credit spread tends to be. We also find that the influence of accounting textual tone on bond credit spreads is limited by analyst coverage. A higher level of analyst coverage would weaken the influence of textual tone on bond financing cost. Further subsample analysis shows that the bond market reacts more strongly to the stateowned companies and companies with lower equity concentration The empirical evidence provides implications to bond pricing.