We investigate how monetary policy in a mixed financial system such as that of China, which is characterized by a juxtaposition of quantity- and price-based policy instruments and the co-existence of regulated and market-determined interest rates, affects bank lending. Using a newly constructed...

This paper presents some early results from ongoing research assessing the impact of China's financial markets on those in other Asian-Pacific economies, and comparing it with that of the United States (Shu, He and Wang, forthcoming). Our analysis suggests that China's influence on the regional...

This paper investigates if relationship lending and bank market concentration permit informational rent extraction through collateral. We use equity IPOs as informational shocks that erode rent seeking opportunities. Using unique loan data from China, we find collateral incidence increases with...

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...

In this paper, we provide a qualitative and theoretical framework to analyze the rapid growth of shadow banking in China. An important characteristic of the system is its close connection with traditional banks, making it very bank-centric. Our theoretical model employs the concept of...

This paper investigates if informational monopolies resulting from relationship lending and bank market concentration allow for rent extraction through collateral. Our identification strategy hinges on the notion that informational equalization shocks (such as equity IPOs) erode rent seeking...

Using newly collected data this paper shows that Chinese shadow banking is different from the US counterpart in two important dimensions. The Chinese system creates information insensitive investment products by implicit guarantee rather than financial engineering and operates on a banking...

How should we think about the determination of interest rates in China after interest rate liberalisation? Would effective deposit rates, lending rates and bond yields move higher or lower? We argue that interest rates in a liberalised environment would need to be anchored by the conduct of...

The use of collateral is one of the defining characteristics of loan contracts. This paper investigates if relationship lending and market concentration allow for informational rent extraction through collateral. We use equity IPO data as informational shocks that erode rent-seeking...

The conventional wisdom that housing prices are the present value of future rents ignores the fact that unlike dividends on stocks, rent is not discretionary. Housing price uncertainty can affect household property investments, which in turn affect rent. By extending the theory of investment...