A fundamental idea in modern asset pricing is that risk aversion may be time varying and countercyclical (Campbell and Cochrane 1999). Existing evidence is scant and based mostly on experimental or survey data. We aim to test this key assumption using a large panel of real-world transaction...

We provide a novel interpretation of shadow banking in China from the perspective of dual-track interest rate liberalization. Shadow banking leads to a Kaldor-Hicks improvement, if the gains from reducing the capital idleness and financing the more productive private enterprise (PE) outweigh the...