Table of Content

15 June 2021, Volume 0 Issue 6

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Theoretical Economics

The Industry Origins of Resource Misallocation and Its Influences on Total Factor Productivity

LI Zhan

2021, 0(6):  3-11. 

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Based on the database of Chinese Economic Sector Productivity that covers all industries, this paper adopts Jorgenson’s growth accounting approach to measure the growth rate of total factor productivity (TFP) in China, and incorporates the reallocation effects of capital and labor inputs into the accounting framework to examine their impacts on TFP. Then, this paper decomposes the reallocation effects of capital and labor into factor inputs’ growth rate and service prices to explore their industry origins and causes. The results show that from 1978 to 2018, the average annual growth rate of China’s TFP was 0.90%, of which 0.32% came from the net effect of capital and labor reallocation, which contributed nearly 40% of China’s TFP growth rate. By decomposing the reallocation effects of capital and labor into the industrial level, the findings reveal that the misallocation phenomenon in China’s capital market is mainly due to the inflow of a large amount of capital into the service sector, whose returns are relatively lower. The main reason for the higher efficiency of labor allocation is that most laborers flow from the agriculture sector with lower returns into the industrial and service sectors with higher returns.

Administrative Decentralization and County-Level Innovation: Based on the Empirical Tests of the Reform of County-Power-Expansion

WANG Wen-kai

2021, 0(6):  14-26. 

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At the beginning of the 21st century, China’s provinces began to carry out the reform of county-power-expansion. This paper conducts a study based on the quasi-natural experiment with the difference-in-difference methods. The findings show that administrative decentralization has significantly promoted the innovation at the county-level, the results of the robustness test by controlling time trend and other policy impacts, as well as other studies, all support the above conclusions. The results of the placebo test and the using of micro enterprise data also support the above conclusions. The findings of the mechanism test indicate that the administrative decentralization has strengthened the competition among county-level governments, promoted the improvement of infrastructure and the increase of fixed asset investment, thus promoted the increase of the number (scale) of enterprises. At the same time, the administrative decentralization enables county-level governments to make better use of local information advantages, improve resource allocation, thus promote the innovation output at the county-level. This research conclusion can not only help to understand the relationship between administrative decentralization and county-level innovation, but also provide empirical support for the promotion of the innovation and development of county-level economy and the subsequent policy formulation.

Public Economics & Administration

Risks and Challenges that the Safe Operation of China’s Finance Is Faced and the Countermeasures during the“Fourteenth Five-Year Plan”Period

BAI Yan-feng

2021, 0(6):  27-37. 

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During the“14th Five-Year Plan”period, China is faced with great changes unseen for centuries, the safe operation of its finance is also faced with the risks and challenges from the following four aspects. The first is the“middle income trap”and the“high-income wall”, i.e., the issue of sustainable fiscal and economic development, which lies on the new journey of China’s socialist modernization after China has entered a new stage of development. The second is the digital economy and digital aristocracy that endanger China’s fiscal absorbing capacity and macroeconomic regulation of borders. The third is the awareness of the fiscal risks in the process of fiscal management. The fourth is the shrinking of traditional tax bases and the relative increasing of taxpayers’ tax burdens during the process of China’s economic transformation and upgrading and after the improvement of the level of economic globalization; the issues of the insufficient regulation and control and the weak adjustment faced with the newly emerged tax bases, and the need for the transition of the consumption tax from the“pollution suppression type”to the“healthy lifestyle promotion type”are typical examples in this regard. These problems may cause China’s fiscal development to face the risks of “dimensional reduction hit”, which is unforeseeable and difficult to overcome by China’s traditional fiscal development mode; therefore, it should be given severe attention. Thus, it is suggested for the government to adopt countermeasures from the following five aspects: firstly, to actively respond to the“risk costs”brought about by the uncertainty of the new development and encourage innovation by fiscal incentive means, so as to achieve the transformation of economic development powers; secondly, to innovate the digitalized tax collection mode and construct a tax system to accommodate the digital economy; thirdly, to let loose the population policy of family planning as soon as possible, so as to eliminate the hidden dangers of the strategic development; fourthly, to promote the transformation of consumption tax and build a modern green tax system; lastly, to perfect the fiscal response mechanism for emergency to prevent instantaneous shock risks.

Will Local Government Debt Risks Aggravate Regional Financial Risks Aggregation?

ZHAO Wen-ju, ZHANG Zeng-lian

2021, 0(6):  38-50. 

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Based on the panel data of 30 provinces in China from 2008 to 2018, this paper measures the local government debt risks from three aspects of explicit, implicit and comprehensive debts. It also uses spatial Durbin model (SDM) to study the spillover and aggregation effect of local government debt risks on the regional financial risks. The results show that China’s regional financial risks present a significant feature of high-low aggregation distribution, with the highest in the eastern region, followed by the western region, and the lowest in the central region. The three types of local government debt risks can all significantly drive up the level of regional financial risks in the jurisdiction. The increase of the implicit and comprehensive debt risks of local governments can significantly lower the level of regional financial risks in the adjacent areas, making the regional financial risks in the adjacent areas transfer to the inside of the jurisdiction. The results of further study indicate that the reason for this phenomenon is that when the financial resources of the local governments decline, the regional financial risks accumulate by themselves within the regions and lead to the transfer of regional financial risks among the neighboring regions. Therefore, it is suggested to govern the regional financial risks from the following three aspects: firstly, to pay close attention to the regional financial risk aggregation in the eastern region; secondly, to regulate the borrowing behaviors of local governments, completely cut off the way of implicit borrowing, and gradually digest the stock of implicit debts; finally, to further release the financial power of local governments and promote the matching of financial power and administrative power of local governments.

Modern Finance

Will Pressure on Capital Replenishment Aggravate Small-Medium Sized Bank’s Risk Taking? Empirical Evidences from City Commercial Banks

ZHANG Jian-bo, WANG Yang

2021, 0(6):  51-63. 

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Based on the unbalanced panel data of 92 city commercial banks in China from 2009 to 2018, this paper conducts an empirical test of the relationship between the pressure on capital replenishment and the risk taking of the small-medium sized banks, and the mediating effect as well. The result shows that the pressure on capital replenishment will significantly aggravate the overall risk taking and the credit risk bearing of the small-medium sized banks, that the banks’ capacity of innovation can weaken the impact of the pressure on capital replenishment on risk taking, and that the banks’ asset scale will strengthen the impact. The results of further study indicate that the pressure on capital replenishment can impact the overall risk taking of the small-medium sized banks through the operation efficiency and can impact the credit risk bearing of the small-medium sized banks through prudent operation level. The regulatory agencies should perfect the multi-level and multi-instrument capital replenishment mechanism for the small-medium sized banks quickly, promote their prudent operation level and the operation efficiency, and strengthen their capacity of endogenous capital replenishment.

Financialization of Entity Enterprises and Corporate Risks: Hedging Effect or Expanding Effect?

ZHAO Rui, CAO Ting-gui

2021, 0(6):  64-77. 

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Under the background of the increasingly prominent financialization trend, this paper takes A-share non-financial listed companies in Shanghai and Shenzhen Stock Exchanges from 2007 to 2019 as the samples to study the influence of real enterprise financialization on corporate risks and its transmission mechanism with the help of the fixed effect model and the mediating effect model. The findings show that the financialization of real enterprises will significantly expand the corporate risks, that is, the financialization of real enterprises has the“risk expansion effect”on corporate risks. Meanwhile, compared to the state-owned enterprises with higher risk bearing capacity, the enterprises at the growing or maturity stage, and the enterprises with less financing constraints, the financialization of the non-state-owned enterprises with lower risk bearing capacity, the enterprises at the start-up or recession stage, and the enterprises with tighter financing constraints has a greater“risk expansion effect”resulted from corporate risks. The results of further study show that the financialization of real enterprises will increase corporate risks by squeezing out the investment of real assets and reducing the income from the main businesses. Therefore, strengthening the information disclosure and supervision on the financial investment behaviors of real enterprises, perfecting the internal risk warning system and the prevention mechanism of real enterprises, and guiding real enterprises to focus on the development of their main business will help to reduce the impact of real enterprises’ financialization on corporate risks.

Business Administration

Digital Economy, Market Integration and Corporate Innovation Performance

HOU Shi-ying, SONG Liang-rong

2021, 0(6):  78-88. 

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By incorporating the digital economy, market integration and corporate innovation performance into a unified analytical framework, this paper makes use of the panel data of the A-share high-tech industry listed companies in Shanghai and Shenzhen stock exchanges from 2013 to 2018 to empirically test the influencing mechanism and the path of the digital economy and market integration on corporate innovation performance. The research results show that both the digital economy and the market integration are conducive to promoting the improvement of corporate innovation performance, and the digital economy has a positive regulatory effect on the innovation incentive effect of market integration. This conclusion is still valid after a series of robustness tests. The findings of further mechanism analysis show that market integration affects corporate innovation performance mainly through promoting the flow of innovative elements, and it has no significant impact on technological diversification, while the digital economy affects corporate innovation performance mainly through the channel of technological diversification. In addition, the differences in corporate characteristics have not changed the innovative effects of the digital economy and the market integration. However, the marginal effect of digital economy and market integration is stronger on the non-state-owned enterprises and the mature enterprises.

A Study of the Impact of Cause-Related Marketing on Consumers’ Indulgent Behavior

CAI Wen-zhu, HUANG Xiang-hui

2021, 0(6):  89-99. 

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In recent years,cause-related marketing has attracted a great deal of attention due to its positive effects. As an important foothold, consumer purchase has also become a hotspot in the researches of cause-related marketing. However, few studies have focused on the negative effects of cause-related marketing. Based on the theories of tender feeling and moral licensing, this study conducts three experiments. The results show that, compared with no promotion, the cause-related marketing promoted by enterprises has a significant positive effect on consumers’ indulgent behaviors. The sense of tender feeling plays a mediating role in the relationship between the cause-related marketing and the consumers’ indulgent behavior, and this mediating effect should be moderated by the internal moral identity, i.e., the higher internal moral identity would reduce the licensing effect triggered by the cause-related marketing. The research findings can deepen the perception of the impacts of cause-related marketing and offer a theoretical basis to effectively reduce its negative impacts.

Industry & Trade

R&D Spillovers and the Complexity of China’s Industrial Products under the Dual-Circulation Pattern

LI You

2021, 0(6):  100-112. 

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The increase in product complexity can promote the sustained economic growth. The more types and quantities of complex products a country can produce, the more invincible the country is in the international economic competition. This paper discusses in detail the mechanism of R&D spillovers influencing product complexity under the dual-cycle pattern and uses the data of 32 Chinese industries from 2000 to 2017 to empirically test the effects of R&D spillovers on the product complexity in China’s industries. The results of the theoretical mechanism analysis show that under the new development pattern with the domestic big cycle as the main body and the domestic and international double cycles promoting each other, R&D spillovers can promote product complexity through competition effects, feedback effects, market demand-induced effects, demonstration and imitation effects, and human capital effects. The results of the empirical test show that intra-industry R&D can significantly promote the increase of product complexity. Although inter-industrial R&D is positively correlated with product complexity, it is not significant. Foreign R&D has significantly promoted the complexity of Chinese industrial products through import channels and other channels; foreign direct investment has also played a significant role in promoting the increase in the complexity of China’s industrial products. The industrial human capital is an important factor in the increase of the complexity of China’s industrial products. Product complexity has a significant cumulative feature, and the product complexity of the previous batch plays a significant role in promoting the complexity of the current products.

Economic Agglomeration of the Yangtze River Economic Belt and Promotion of the Domestic Value-Added Rate of Manufacturing Exports

LI Nan, SHI Bei-bei, Bai Dong-bei

2021, 0(6):  113-125. 

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Based on the data from China Industry Business Performance Data and China Customs Trade Database, this paper conducts a measurement of the domestic value-added rate (DVAR) of the enterprises’ export in the manufacturing industry and empirically analyzes the impact of economic agglomeration of Yangtze River Economic Belt on the export upgrading of regional manufacturing industry and its action mechanism. The results show that economic agglomeration has significantly promoted the DVAR of export of manufacturing enterprises, and this effect is better in the regions with higher level of economic agglomeration. In the upper-middle reaches of Yangtze River, the promotion effect brought by the economic agglomeration is not ideal, while the effect is significant in the lower reaches of Yangtze River and the central cities there along the river. Meanwhile, economic agglomeration helps to improve the DVAR of general trade and mixed trade exports. It is also possible that trade processing enterprises will be pushed to transform into general trade enterprises with higher added value. The results of the mechanism tests indicate that it is through promoting the regional information development and increasing the input ratio of domestic intermediate products that economic agglomeration can increase the DVAR of exports. Furthermore, regional economic agglomeration can help to expand the domestic intermediate products market and deepen the international participation of enterprises. In terms of external influences, the maturity of factor markets and the improvement of market services can also help to strengthen the promoting effect of economic agglomeration on the upgrading of manufacturing exports.

Modern Accounting

The Impact of Group Brand Strategy on Capital Structure’s Dynamic Adjustment

LIANG Si-yuan, ZENG Qing-sheng, ZHANG Cheng

2021, 0(6):  126-137. 

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Taking China’s A-share listed companies from 2007 to 2017 as research objects, this paper constructs the index of group brand strategy and investigates the relationship between group brand strategy and capital structure’s dynamic adjustment. The finding shows that the diversified group brand strategy can help enterprises to speed up the dynamic adjustment of capital structure, which is mainly manifested in the improvement of the speed of upwards adjustment of capital structure. The result of the test of the acting path shows that the diversified group brand strategy has significantly reduced the cost of debt capital. The result of further heterogeneity test shows that among the enterprises of non-state owned or with poor information environment, the impact of group brand strategy is more significant. Therefore, when carrying out the adjustment of capital structure, enterprises should consider the impact of group brand strategy on the dynamic adjustment of capital structure by referring to the characteristics of them.

Collusion or Coordination: Non-Controlling Shareholders’ Network Power and Stock Price Collapse Risk

TIAN Kun-ru, YOU Zhu-jun

2021, 0(6):  138-148. 

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Non-controlling shareholders can restrain the controlling shareholders or management from hiding bad news, and also can form a channel of interest transmission through collusion, which are crucial to the maintenance of the economic order of the capital market. From the perspective of stock price collapse, this paper examines the impact of non-controlling shareholders’ network power on collapse risks. The findings show that the greater the non-controlling shareholders’ network power, the more likely they can reduce the stock price collapse risks. The result of the mechanism analysis indicates that non-controlling shareholders’ network power can reduce stock price collapse risks through the embedding effect and the governance effect, the former restrains the share price collapse risks through the embedding effect of network information relationship and structure, while the latter restrains the share price collapse risks through the governance effect of the tunneling behaviors of controlling shareholders and the covering behaviors of the management.