Fiscal incentives,financial support for agriculture,and urban-rural inequality

Urban-rural inequality is a significant social problem for developing countries in the process of economic development. Using regional-level panel data from 2004 to 2018, this paper estimates the effect of financial support for agriculture on the urban-rural income gap in China via a staggered difference-in-difference method. In 2009, the finance department issued a Notice on Launching the Pilot Work of Incremental Reward for Agricultural Loans by County Financial Institutions (IRAL) and established an incentive mechanism to leverage financial funds to guide and motivate county financial institutions to increase their investment in agriculture-related credit and support agricultural development. The results show that, through fiscal incentives, financial institutions have more incentives to increase agricultural loans and urban-rural income inequality significantly declined throughout the study data period, particularly in underdeveloped areas. We propose that this policy reduces urban-rural income inequality via three mechanisms: financial availability, shift of labor, and human capital. Furthermore, we also examined the effect of IRAL on the urban-rural consumption inequality, although no significant relationship was found.     

金融非均衡发展对城乡收入差距影响的实证研究

本文基于2002年至2008年中国大陆28个省(市)的面板数据,采用广义矩估计(GMM)研究金融非均衡发展对城乡收入差距影响.实证结果表明,城乡金融非均衡发展拉大了城乡居民收入差距.从库茨涅茨效应角度分析认为,金融非均衡发展对城乡收入差距影响将经历两个阶段.第一阶段,发展中国家整体金融资源配置不均等,金融发展伴随收入差距拉大;第二阶段,发展中国家整体金融发展缩小城乡收入差距,根源在于农村金融体系逐步完善,城乡金融发展逐步回归均衡,资源配置进一步优化.当前政府正着手于重构农村金融体系,可以预期,金融非均衡发展对收入分配的影响将有望得到改善.     

Who pays attention to sustainability reports and why? Evidence from Google search activity

We introduce country-level Google search activity as a direct measure of the level of stakeholder attention directed towards sustainability reports. We validate this measure by establishing that search activity for sustainability reports is correlated with temporal patterns in firms' supply of these reports. To frame the economic magnitude of this search behaviour, we then show that the level of attention directed towards sustainability reports is very low compared to the level of attention directed towards financial and accounting information. Next, we examine two related research questions. First, we identify who pays attention to sustainability reports. We find, consistent with the environmental Kuznets curve, that attention towards sustainability reports is strongly associated with economic development. Consistent with findings in prior research that suggest citizens in stakeholder-oriented countries have stronger preferences for firms to act prosocially, we also find that search activity for sustainability reports relative to search activity for financial performance metrics is greater in civil law countries than in common law countries. Finally, we then explore the question of why individuals pay attention to sustainability reports and find evidence that suggests sustainability reports are used for two primary purposes: evaluating the societal impacts of firms' actions; and, firm valuation.     

中国居民收入差距的演变——基于金融深化视角的实证研究

本文利用我国1952年-2005年的时间序列数据,对中国金融发展与收入差距的关系进行分析。在控制了其他因素后,我们得出结论：（1）中国居民收入差距与金融深化进程遵循倒“U”曲线的演化路径;（2）我国金融深化与收入差距之间存在着扩大的库兹涅茨效应。随着金融发展和现代部门在经济中比重的提高,政府在利用金融体系调控经济中的政策倾向在一定程度上诱导了这一现象的发生;预计我国居民收入差距呈扩大趋势并将延续一段时期。     

Usefulness of comprehensive income reporting in Canada

In January 2005 the Canadian Accounting Standards Board (AcSB) issued three new accounting standards that require Canadian firms to mark-to-market certain financial assets and liabilities and recognize the holding gains and losses related to these items as other comprehensive income or as part of net income. The Board’s objectives for issuing the new standards are (i) to harmonize Canadian GAAP with US and International GAAP, (ii) to enhance the transparency and usefulness of financial statements, and (iii) to keep pace with changes in accounting standards in other countries that are moving towards fair value accounting. This paper investigates empirically whether requiring Canadian companies to report comprehensive income and its components provides the securities market with incremental value-relevant information over the traditional historical-cost earnings approach.Previous empirical studies provide mixed evidence on the value relevance of other comprehensive income and its components. This mixed evidence may be attributed partially to the use of as if methodology to construct an ex-ante measure of other comprehensive income prior to the implementation of SFAS 130, which introduces measurement error. In contrast, this study uses actual data on other comprehensive income for a sample of Canadian firms cross-listed in the US in the period 1998–2003. We find evidence that available-for-sale and cash flow hedges components are significantly associated with price and market returns. We also find that aggregate comprehensive income is more strongly associated (in terms of explanatory power) with both stock price and returns compared to net income. However, we find that net income is a better predictor of future net income relative to comprehensive income. Our findings suggest that mandating all Canadian firms to adopt the new accounting standards is expected to enhance the usefulness of financial statements. Our findings, therefore, should be of interest to Canadian accounting policy makers as they provide ex-ante evidence on the potential usefulness of mandating firms to report comprehensive income and the components of other comprehensive income in their financial statements.     

Income Inequality,Growth, and the Enlargement of the European Union

This study investigates the relation between income inequality and economic growth, namely, the Kuznets curve, in the context of EU enlargement. The results have implications regarding how the latest enlargement of the European Union affects the relationship between income inequality and growth, for both EU member countries and the European Union as a region. Estimation results show that there is no evidence of a significant original or reverse Kuznets curve for any of the groups of countries in this study. Therefore, empirical results suggest that the latest enlargement, and a possible future accession of the candidates, may not change the fact that a Kuznets curve does not exist for the European Union.     

An evaluation of SFAS No. 130 comprehensive income disclosures

In this study, we provide evidence on the pricing of other comprehensive income (OCI) that differs from most evidence in prior research. Prior archival research has largely concluded that OCI is not priced by investors. In contrast, we provide evidence in the post-SFAS 130 period that OCI is priced on a dollar-for-dollar basis as is predicted by economic theory for transitory income items. We attribute this finding to our use of post-SFAS 130 as-reported measures of OCI rather than pre-SFAS 130 as-if estimates of OCI measures. Furthermore, we document that two components of OCI, foreign currency translation adjustment and unrealized gains/losses on available-for-sale securities, are priced by investors. In the post-SFAS 130 period, we also find that the type of financial statement in which firms report OCI and its components affects pricing, consistent with the conclusions of prior experimental research. However, our evidence suggests that investors pay greater attention to OCI information reported in the statement of changes in equity, rather than in a statement of financial performance. This could be attributed to investors becoming more familiar in the post-SFAS 130 period with the predominant reporting of OCI and its components in the statement of changes in equity. These findings may be relevant to both the Financial Accounting Standards Board and the International Accounting Standards Board, which jointly are undertaking a new project that, in part, is addressing financial statement presentation of OCI items.

Investment appeal of small growth stocks

We examine the investment appeal of small growth stocks by addressing: (1) the extent of mean reversion in small growth stocks; and (2) the set of financial variables that uniquely and strongly identify small growth stocks with the most investment appeal. We use 22 years of data derived from Forbes' annual list of best small growth companies. Our findings indicate that the market generally overreacts in the 36 months leading up to the month of Forbes' publication. Cumulative abnormal returns decline sharply after publication of Forbes list. We also examine whether Forbes' financial filters are justified or investors should expand the financial parameters to identify stocks with better investment appeal. Our findings suggest that three out of four Forbes financial filters to screen companies performed better in the post-publication period. Small stocks performed poorly in the post-publication period when analyzed on 13 additional financial variables. Specifically, sales growth rate, cash flow growth rate, 5-year compound EPS growth rate, and net income growth rate were more than halved for the average company in the 36 months after the publication of Forbes' list. These results suggest that financial filters Forbes used to generate its list may not capture the underlying performance of small stocks. In examining the two research questions, evidence is unsettling and to some extent contrary to that provided by prior research.     

Quantitative wave model of macro-finance

This paper presents macro-finance as ensemble of economic agents and suggests use risk ratings of economic agents as their coordinates on economic space. Financial variables of separate economic agents are defined as functions of time and coordinates on economic space. Aggregations of financial variables of separate economic agents with coordinates near point x on economic space define macro-financial variables as function of x. Hydrodynamic-like equations describe evolution and mutual dependence between macro-financial variables. As example, for simple model of mutual dependence between macro-financial Demand on Investment and Interest Rate we derive hydrodynamic-like equations in a closed form. Perturbations of macro financial variables can generate waves those propagate on economic space and we derive wave equations. Macro financial waves can propagate on economic space with exponential growth of amplitudes and cause time fluctuations of finance variables that may model financial and business cycles. Variety of macro financial waves on economic space gives new look on internal dynamics of macro finance and reveals hidden complexity of macro financial modeling and forecasting.     

Interest rate spreads and banking system efficiency: General considerations with an application to the transition economies of Central and Eastern Europe

Low spreads between loan rates and deposit rates are indicative of a more efficient financial system. We argue that spreads are better cross country measures of banking system efficiency than the net interest margins used in previous studies. We present theoretical and empirical evidence that the spread may be a particularly good measure of efficiency, both for the transition economies and other countries. The spread is a financial intermediation measure and is highly negatively correlated with conventional measures of intermediation. Consistent with theory, the spread is negatively related to economic growth. We also find that the spread has determinants similar to other FI measures. International agencies should report spreads and put more emphasis on this measure of efficiency.     

金融市场参与、风险异质性与家庭幸福

本文研究了金融市场参与对家庭幸福的影响。理论分析显示,金融市场参与通过风险和收益对家庭幸福产生影响。本文运用2015年中国家庭金融调查数据,实证研究了金融市场参与对家庭幸福的影响。为克服内生性,本文选取工具变量,运用极大似然估计发现,家庭参与金融市场会显著提高家庭幸福的可能性。从投资风险的角度进一步研究发现,金融投资的风险异质性对家庭幸福有显著影响:家庭参与低风险金融投资会显著提高家庭幸福,参与高风险金融投资会显著降低家庭幸福。从民间借贷参与中,本文发现家庭参与民间借出款会显著提高家庭幸福的可能性。民间借贷投资风险对家庭幸福的异质性影响也是存在的,高风险借出款对家庭幸福有显著的负向影响。本文为理解家庭金融投资行为与幸福的关系提供了新的证据,可为构建和谐社会提供有益参考。     

Consolidation in banking and the lending channel of monetary transmission: Evidence from Asia and Latin America

This paper examines the relationship between increased consolidation in banking and monetary policy transmission in eighteen Asian and Latin American economies, using bank-level data from 1996 to 2006. Our results provide consistent evidence that as concentration in banking increases, the bank lending channel is weakened, leading the monetary policy transmission mechanism to be less effective. We also investigate how this relationship between concentration and the strength of the lending channel depends on bank-specific characteristics. Using bank-level balance sheet and income statement data allows us, first, to better identify the effects of banking consolidation on the supply-side bank lending channel from those of the demand-side interest rate channel, and second, to test for any systematic differences in the impact of consolidation on monetary policy transmission across banks of different size and financial strength. We also discuss potential explanations for and policy implications of the main findings of this paper.     

安徽省金融发展、经济增长与城乡居民收入差距的动态研究

随着金融发展、经济增长,城乡居民之间的收入差距也逐渐扩大.金融发展、经济增长与城乡居民收入差距之间有着什么样的关系一直是国内外学者研究的焦点.因此,本文选取安徽省1990-2011年的相关数据,运用协整检验、向量误差修正（VEC）模型进行实证研究,结果表明：短期内,金融发展缩小了城乡居民收入差距,经济增长扩大了收入差距;相反,长期内,金融发展扩大了城乡居民收入差距,经济增长缩小了收入差距.并在此基础上提出缩小收入差距的政策建议.     

Financial Deepening,Asset Price Inflation,and Economic Convergence: Empirical Analysis Based on China’s Experience

Abstract

In this study, we test for convergence in financial development and economic growth in China’s financial deepening reform process by using system GMM method. The results show strong evidence of the mutually interactive and systematic relationship between financial development and economic growth, and the system is in a condition of long-run divergence. The main cause of divergence in the system changed after 2008 from financial depression to asset price expansion. This study provides evidence that the government should intensify financial deepening reforms and pay attention to financial resource flows to prevent excessive asset price expansion.     

The interest group theory of financial development: Evidence from regulation

We use a new dataset of de jure measures of trade, capital account, product market, and domestic financial regulation for 91 countries from 1973 to 2005 to test Rajan and Zingales’s (2003) interest group theory of financial development. In line with the theory, we find strong evidence that trade liberalization is a leading indicator of domestic financial liberalization. This result is robust to the use of different data frequencies (annual, 5-year intervals), estimation methods (OLS, 2SLS, system GMM) and a check for non-linear effects. However, in contrast to the theory, we do not find consistent evidence of an effect of capital account liberalization.     

Phoenix rising: Legal reforms and changes in valuations in Finland during the economic crisis

Finland experienced an extremely severe economic depression in the early 1990s. As a part of the government's crisis management policies, significant new legislation was passed that increased supervisory powers of financial market regulators and reformed bankruptcy procedures significantly decreasing the protection of creditors. We show that the introduction of these new laws resulted in positive abnormal stock returns. The new laws also lead to increases in firms’ Tobin's q, especially for more levered firms. In contrast to previous studies, our results also suggest that public supervision of financial markets fosters rather than hampers financial market development.     

农村金融发展对农村经济和农民收入的影响研究——基于VEC模型的实证分析

本文基于2001—2009年的季度数据,通过构建一个向量误差修正模型,实证分析了中国农村金融发展对农村经济增长以及农民收入增加的影响。结论表明,中国农村金融发展对农民收入增加产生了显著的影响,同时中国农村金融发展、农村经济增长以及农民收入增加之间存在长期的均衡关系。     

农村金融发展对收入分配的机制分析与实证研究

在分析金融发展影响收入分配的传导机制的基础上,选择1978～2009年相关指标对城乡收入差距中金融发展因素进行实证研究。实证结果显示,农村金融发展规模、农村金融发展效率和农村金融发展结构等指标与农村经济发展的关系密切,但影响效果各有不同。当前,农村金融发展必须坚持以科学发展观为指导,按照统筹城乡经济金融协调发展的根本要求,继续深化农村金融体制改革,努力消除农村金融抑制,优化农村金融发展结构,建立适应社会主义市场经济发展根本要求的农村金融体系。     

Law,Finance, and Economic Growth

This paper examines how the legal environment affects financial development, and then asks how this in turn is linked to long-run economic growth. Financial intermediaries are better developed in countries with legal and regulatory systems that (1) give a high priority to creditors receiving the full present value of their claims on corporations, (2) enforce contracts effectively, and (3) promote comprehensive and accurate financial reporting by corporations. The data also indicate that the exogenous component of financial intermediary development—the component defined by the legal and regulatory environment—is positively associated with economic growth. Journal of Economic Literature Classification Numbers: G21, K12, O16     

Bank liquidity,stock market participation,and economic growth

We develop a growth model with banks and markets to reconcile the observed decreasing trend in the relative liquidity of many financial systems around the world with the increasing household participation in direct market trades. At low levels of economic development, the presence of fixed entry costs prevents the agents from accessing the market, and pushes them towards the banks, which provide high relative liquidity. We characterize the threshold after which the agents are rich enough to access the market, where the relative liquidity is lower, and show that the relative liquidity of the whole financial system (banks and markets) drops because of the increasing market participation. We provide some evidence consistent with this theoretical prediction: a one-unit increase in an index of securities market liberalization leads to a drop in the relative liquidity of between 17 and 27 per cent.