Contemporary Finance & Economics

Inclusive Environmental Perception and Residential Property Allocation

QIN Yu, DENG Xin, BAI Yang

2024, 0(8): 3-16.

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Human being is the core element of regional economic and social development. An inclusive regional environment, including culture, institution, working and living, is crucial in attracting talents and facilitating housing allocation. Based on the micro-data from the Inclusive Green Development Follow-Up Survey by the Chinese Academy of Social Sciences, this paper conducts an empirical study. The findings are as follows: firstly, the perception of an inclusive environment has a significant positive effect on residents’ housing allocation. With the number of traditional Chinese brands and the number of imperial examination graduates during the Ming and Qing dynasties used as instrumental variables in the model, a 1% increase in residents’ perception of regional inclusiveness will increase the likelihood of housing allocation in the area by 0.582% and 0.201%, respectively. Secondly, a high level of regional inclusive environment is more conducive to attracting talents to settle and allocate housing. However, it also produces a“crowding out”effect on the relatively disadvantaged groups. The mechanism analysis shows that a more inclusive environment can enhance residents’ confidence in regional economic and social development and asset appreciation, as well as their happiness in life and work, thereby increasing the likelihood of their settling and housing allocation in the area. The above conclusions indicate that the construction of an inclusive regional environment can enhance residents’ willingness to allocate housing locally, which has a positive significance in attracting talents inflow. However, with the improvement of regional inclusiveness and the influx of population, special attention should be paid to the urban integration of relatively vulnerable groups.

The Siphon Effect and Prisoner’s Dilemma in Regional Economical Development: A Case Study of the Six Central Provinces of China

WANG Jun-jie, XU Shu-yun, ZHOU Yi

2024, 0(8): 17-29.

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Unbalanced development is one of the primary contradictions currently faced by China, manifesting not only in the imbalances between regions but also within specific areas, such as the differences among the six provinces in central China. As the political, economic, and cultural hubs within their provinces, provincial capitals are the key engines driving regional economic growth, and their development can significantly impact the progress of the entire area. The development divergence among the six central provinces can largely be attributed to the siphon effect and the prisoner’s dilemma phenomenon. The relatively developed provinces, especially those rapidly growing provincial capitals, will tend to siphon resources from those less developed provinces. This will lead to the flow of talents, capital, and materials from less developed regions to more developed ones, adversely affecting the development of the latter. Moreover, as some provinces implement“strong provincial capital”strategies centered on strengthening their capitals, local governments have begun to exhibit the clear characteristics of the prisoner’s dilemma between them. That is, when one province strives to expand the scale and influence of its capital, the neighboring provinces, in order not to lose their competitiveness, are also compelled to adopt the similar strategies to prevent the loss of their resources. The empirical analysis based on the panel data from 80 cities in the six central provinces also confirms the existence of the siphon effect. Particularly in Jiangxi Province, the decline in the primacy of its capital city over the past decade has significantly reduced its ability to attract the key resources such as population, talents, finance, and industry, compared to other provinces, which is a key factor in its relatively lagging economic development. Therefore, in order to narrow the economic gap with their neighboring provincial capitals, the provinces with lower capital city primacy need to enhance the construction of their capitals to gather more resources within their province and, if possible, attract resources from their neighboring provinces.

The Promotion of Modernization of Social Governance through Personal Income Tax Reform: Theory and Empirical Study

ZHOU Ke-qing, WU Jin-ping

2024, 0(8): 30-44.

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As the most important direct tax in China, the implementation of the reform of personal income tax not only affects the micro-economic behavior of residents, but also affects the modernization process of social governance. Based on the data of China General Social Survey (CGSS 2015), this paper conducts an empirical study of the impact of the reform of personal income tax on the modernization process of social governance by using Ordered Probit model and Probit model. The findings show that the reform of personal income tax has effectively promoted the modernization process of social governance. On the one hand, the reform of personal income tax has significantly increased the willingness of residents to pay taxes and the trust of residents in the government, which can effectively maintain social order. On the other hand, the reform of personal income tax has also promoted the willingness of residents to participate in politics and promote their political participation, which can effectively stimulate social vitality. From the perspective of specific mechanisms, the reform of personal income tax can promote the modernization process of social governance by improving residents’ perception of social fairness and government transparency. Therefore, it is necessary to establish a more fair and just personal income tax system and maintain a good social order, improve the institutionalized channels for public participation in social governance and effectively stimulate social vitality, promote the improvement of the quality and efficiency of government transparency and enhance the public’s perception of social equity and government transparency.

Flexible Tax Collection and Management and Firms’ Social Security Compliance: An Analysis Based on the Tax Credit Rating System

YIN Ling, WU Yi-ping, ZENG Qi

2024, 0(8): 45-58.

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Currently, the income and expenditure pressure on China’s social security fund is increasing, an important way to fill the social security fund gap is to improve enterprise social security payment compliance. Based on the data of China’s A-share listed companies from 2011 to 2021, this paper takes the implementation of the tax credit rating system as a quasi natural experiment and conducts an empirical investigation of the impact of flexible tax collection and management on enterprise social security payment compliance. The findings show that the implementation of the tax credit rating system has significantly improved the social security payment compliance of firms, i.e., the flexible tax collection and management can promote the compliant payment of social security payment of enterprises. Further analysis reveals that the implementation of the tax credit rating system will increase the media attention of firms, thereby improving the social security payment compliance of firms. Besides, the facilitating effect of flexible tax collection and management on firms’ social security payment compliance is mainly found in regions where the tax authorities are fully responsible for collecting social security payment, as well as in the non-state-owned firms, the large-scale firms and the capital-intensive firms. Therefore, it is necessary to deepen the construction of tax credit system to create a good institutional environment for the improvement of firms’ social security payment compliance, to strengthen the supervision of firms’ social security payment evasion and standardize their social security payment behaviors, to give full play to the information, collection and management advantages of the tax authorities to promote the linked governance of taxes and fees, and to continue to push forward the policy of lowering social security payments and focus on the social security payment burdens of different types of firms.

A Research on the Measurement and Evolution of City Commercial Banks’ Implicit Guarantee in China

LI Yi-hua, ZHU Jie

2024, 0(8): 59-71.

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It is an important aspect of preventing and controlling financial risks and improving the efficiency of fund allocation to accurately identify the implicit guarantee of city commercial banks. Based on the data of inter-bank deposits issued by Chinese city commercial banks from 2014 to 2021, this paper uses the interest rate difference method and the dummy variable method to measure the implicit guarantee level of city commercial banks, and analyzes the evolution of the implicit guarantee of city commercial banks in combination with the bankruptcy event of Baoshang Bank in 2019. The results show that the implicit guarantee can reduce the financing cost of city commercial banks by about 60%. The distribution of the implicit guarantee of city commercial banks is negatively correlated with the rating of city commercial banks and positively correlated with the local government fiscal resources, that is, the lower the rating and the higher the local government fiscal resources, the higher the implicit guarantee level will be. The mechanism analysis reveals that the formation mechanism of implicit guarantee mainly depends on the risks of city commercial banks and the ability and willingness of local government to guarantee. After the bankruptcy event of Baoshang Bank, the implicit guarantee of city commercial banks has been significantly weakened, and this impact is different due to the government’s willingness and ability to guarantee and the different risks of city commercial banks. Therefore, it is suggested that city commercial banks should strengthen the construction of risk early warning system, actively introduce strategic investors and optimize equity structure. It is also suggested that the government departments should optimize the credit rating of city commercial banks and strengthen the role of the third-party institutions in information disclosure.

Research on Macro-Prudential Policies, Financial Frictions, and Government Expenditure Multipliers

LI Xiao-sheng, SONG Ma-lin

2024, 0(8): 72-84.

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The macro-prudential fiscal policy can effectively reduce the fiscal footprint of monetary policy, which is playing a crucial role in controlling debt growth and ensuring economic security. On the basis of establishing a dynamic stochastic general equilibrium model for an open economy, this paper explores the issue of government expenditure multiplier by introducing a macro prudential fiscal policy framework and financial friction factors. The findings show that: firstly, the government expenditure multipliers under the framework of macro-prudential policies is bigger than that without government expenditure multipliers. When only considering the government department debt, the government expenditure multipliers under the framework of macro-prudential policies is the biggest, while the welfare losses are minimized; when the debt of both households and government departments are considered, the government expenditure multiplier under the macro prudential policy framework is smaller than that under the benchmark model. Secondly, under the macro-prudential policy framework, the government expenditure multiplier is smaller under a floating exchange rate system than under a fixed exchange rate system, which is in line with the classical macroeconomic theory. Thirdly, the government expenditure multiplier under financial friction is larger than that without considering financial friction. Given the positive role of macro-prudential policies in controlling debt risks and leveraging the multiplier effect of government spending, it is recommended that government departments introduce macro-prudential policies in the field of fiscal policy.

Harmony is Precious and Beautiful: Digital Transformation and Corporate Cooperation Culture

CHEN Xiao-shan

2024, 0(8): 85-99.

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While empowering traditional technological innovation and reshaping enterprise resources and capabilities, can digital transformation promote the changes in corporate culture and organization? Combining the traditional Chinese virtue of“harmony is precious and beautiful”, this paper conducts an empirical research based on data from the A-share listed companies from 2010 to 2022. The findings shows that digital transformation can help to enhance corporate cooperation culture, mainly through the two paths of alleviating information asymmetry and improving corporate ESG performance. The heterogeneity analysis reveals that the positive effect of digital transformation on corporate cooperation culture is more pronounced in the enterprises of large-scale, non-capital-intensive, or with higher proportion of institutional investor shareholding, and the positive media coverage can strengthen the relationship between the two. The analysis of economic consequences shows that digital transformation can help promote corporate innovation by enhancing their collaborative culture. Based on the above research conclusions, it is recommended that enterprises should seize the opportunity of digital transformation in a timely manner, actively cultivate a corporate culture of keeping promises and pursuing win-win cooperation. Government departments should promote long-term assistance policies for digital transformation tailored to enterprises and establish sound cooperation and communication platforms between enterprises.

How Does Pro-Clean Government-Business Relationship Affect Corporate ESG Performance

WANG Fan-lin, GUO Yu-hang, LI Shao-qing

2024, 0(8): 100-111.

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The performance of enterprises in environmental, social, and governance (ESG) aspects cannot be separated from the support and guarantee of the institutional environment. Taking A-share listed companies in Shanghai and Shenzhen stock exchanges from 2017 to 2021 as samples, this study explores how pro-clean government-business relationship affects corporate ESG performance. The findings show that pro-clean government-business relationship can significantly improve corporate ESG performance. The mechanism analysis reveals that the pro-clean government-business relationship mainly enhances corporate ESG performance through the two channels: improving the external financing environment and suppressing the short-sighted behaviors of corporate management. Further analysis reveals that the“clean”dimension of the government-business relation plays a major role; and in enterprises registered in provincial capitals or municipalities, belonging to non-heavily-polluting industries, with a high degree of digital transformation, and with a higher proportion of institutional investors holding shares, the pro-clean government-business relation can significantly improve corporate ESG performance. Based on the above research conclusions, it is recommended that local governments should actively build pro-clean government-business relationship to optimize financing channels. Meanwhile, enterprises should overcome short-term profit seeking behaviors, so as to achieve long-term sustainable development.

Order Improvement, Tacit Collusion and Minimum Retail Price

WANG Zi-li, WAN Xin

2024, 0(8): 112-125.

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Identifying and weighing the efficiency functions and the anti-competitive consequences of the minimum Retail Price Maintenance（RPM）are important issues that need to be solved urgently in current antitrust theory and practice. The findings of this study show that when there is uncertainty in market demand and there is retail information asymmetry between the upstream manufacturers and the downstream retailers, there are three effects of competing manufacturers using RPM: the order improvement effect, which solves the problem of insufficient orders caused by market demand uncertainty; the tacit collusion effect, which prevents the colluding manufacturers from using information asymmetry to deviate from collusion and improves the stability of tacit collusion; the retail information effect, which prevents retailers from taking advantage of retail information to adjust retail prices. The specific impact of RPM on consumer welfare depends on the comprehensive comparison of the above effects. The greater the uncertainty in market demand, the smaller the degree of retail information asymmetry, or the weaker the product substitutability, the more likely it is that RPM will improve consumer welfare. The antitrust law enforcement agencies can classify and identify the motivations for RPM implementation according to the market demand uncertainty and the retail information asymmetry in the RPM implementation environment, whether retail prices change when low market demand occurs, and the attitude of manufacturers toward retailers’ price cuts. When a manufacturer may use RPM both for order improvement and for tacit collusion effects, the more substitutable the product, the more the law enforcement agencies should consider the anti-competitive consequences of the manufacturer’s use of RPM and implement relatively stricter scrutiny; otherwise, the law enforcement agencies should consider its possible efficiency features and take a relatively more tolerant stance on manufacturers’ use of RPM.

How Can Two-Way FDI Enhance the“Core Chains”Status of“Bottleneck”Industrial Chains?

PANG Lei

2024, 0(8): 126-139.

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The two-way FDI“targeted”industrial design can effectively solve the problem of the out-migration of the low-end industrial chains into the developing countries and the back-flow of the high-end industrial chains into the developed countries, further promoting the“core chains”status of our country’s“bottleneck”industrial chains. From the perspective of targeted investment, this paper uses the data from the Guotaian database, the historical OFDI statistical bulletins, the reports of foreign direct investments and the input-output tables from 2000 to 2022 to empirically study the internal relation between the two-way FDI and the status of the“core chains”of the“bottleneck”industry chains. The following conclusions are drawn: firstly, the internal and external linkages of the two-way FDI and the technology spillover of the“targeted”FDI have significantly enhanced the“core chain”status of the“bottleneck”industry chains; secondly, industry heterogeneity exists in the strength of the two-way FDI enhancing the“core chains”status of the“bottleneck”industry chain, with the strongest effect in the aircraft engine nacelle and the weakest in the lithography machine; thirdly, regional heterogeneity exists in the strength of the two-way FDI enhancing the“core chains”status of the “bottleneck”industry chain, with the strongest effect in the eastern coastal region and the weakest in the northwestern region; fourthly, temporal heterogeneity exists in the function of the two-way FDI in enhancing the status of the“core chains”of the“bottleneck”industrial chains, which is manifested by significant differences at the five periods. Accordingly, this paper proposes the following countermeasures and suggestions: increasing support for two-way direct investment, setting targeted objects for two-way direct investment, fully leveraging the advantages of the strategy of strengthening the nation through human resource development and the new nationwide system, and further enhancing the core chain position of China’s“bottleneck”industrial chain.

Digital Transformation and Enterprise ESG Performance: From the Perspective of Production Safety Accidents

CHEN Wei-zhong, MA Yong-qiang, YANG Dan

2024, 0(8): 140-152.

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Preventing and controlling workplace safety accidents to ensure occupational safety of workers is an important aspect of corporate ESG performance. From the perspective of enterprise safety accidents, this paper explores the impact of enterprise digital transformation on enterprise workplace safety accidents by making use of the data of the listed companies from 2007 to 2021. The study finds that digital transformation can significantly inhibit the occurrence of workplace safety accidents. The mechanism test reveals that enterprise digital transformation can improve the internal governance quality and the intelligent production management level of enterprises, thus preventing and curbing workplace safety accidents. The heterogeneity analysis reveals that the inhibitory effect of digital transformation on the safety accidents is more significant in enterprises with sufficient funds for digital transformation and stronger focus on practicing ESG. The dimensional analysis reveals that digital transformation of enterprises can not only significantly reduce the frequency of workplace safety accidents, but also significantly reduce property and personnel losses caused by safety accidents. To this end, it is necessary to encourage and guide enterprises to actively engage in digital transformation, and promote the application of the results of enterprise digital transformation.

Bankruptcy Courts Establishment and Corporate Audit Fees

ZHEN Yu-han, HU Guo-qiang

2024, 0(8): 153-164.

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A sound bankruptcy system is an important manifestation of the rule of law in the business environment. Taking the non-financial listed companies on the A-share market in China from 2016 to 2022 as samples, this paper investigates the impact of bankruptcy court establishment on audit fees. The findings show that the establishment of bankruptcy courts will increase audit fees. The mechanism analysis reveals that the establishment of bankruptcy courts increases the number of bankruptcy cases, enhances media attention, and thus increases the reputation and litigation risks of auditors, resulting in higher audit fees charged by auditors. The heterogeneity analysis reveals that when the risk of corporate bankruptcy is high, the risk sensitivity of accounting firms is high, and accounting firms have relatively strong bargaining power, the establishment of bankruptcy courts has a stronger effect on the increasing of audit fees. Therefore, it is necessary to continuously deepen the reform of the bankruptcy judicial system and establish more bankruptcy courts nationwide. When making audit decisions, auditors should take into account whether the local bankruptcy court has been established.

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