With interest rate liberalization, China's commercial banks expose to more interest rate risks and use interest-rate derivatives to manage these risks. This paper develops a theoretical model, capturing the main characteristics of the banking sector in China, to analyze the effect of...

Embarking on banking reform nearly four decades ago, China has made significant progress. This paper takes a closer look at banking reform in China, and reviews historical progress and current efforts that Chinese authorities have made to date. To date, there are three phases of the reforms:...

Since China is becoming an increasingly important player in the world economic scene, its exchange rate policy, among other issues, have attracted the great attention of global financial markets and policymakers. Our paper takes a closer look at the evolution of the Renminbi (RMB) exchange rate...

Our paper explores the influence of credit derivatives on bank credit supply theoretically and empirically. We build a two-stage model of financial intermediation, which treats the bank under consideration as one of a large number of monopolists in the local credit market. From the theoretical...

Our paper examines the effect of derivatives activities on credit risk taking in Chinese banks theoretically and empirically. We develop a model of financial intermediation where bank can engage in costly monitoring to reduce the credit risk in its loan portfolios. Our model incorporates three...

Our paper studies the effect of foreign exchange derivatives on international trade in China theoretically and empirically. On one hand, we build a two-stage model of an international Cournot duopoly under exchange rate uncertainty, which extends the model of Broll et al (2009). Our extended...

This paper examines changes in the monetary policy exchange rate channel in the presence of foreign currency derivatives (FCD) markets in China. Initially a theoretical macroeconomics model incorporating the exchange rate risk hedging is presented, and this is followed by an empirical test. A...