Pub Date : 2025-02-04DOI: 10.1016/j.pacfin.2025.102693
Lei Yin , Guanglin Sun , Tao Kong
This study establishes a theoretical framework examining how regional big data development on advancement influences corporate financial fraud. Through empirical analysis utilizing data from China's A-share listed companies 2014 to 2021, the research reveals that fostering big data development inhibits financial fraud in corporations. This effect is attributed to the alleviation of corporate financing constraints and reduction in financial leverage. Regional big data development can reduce corporate financial fraud by lowering agency costs. Heterogeneity tests indicate a notable impact in large enterprises, state-owned entities, and enterprises in high marketization regions, whereas the effect is not significant in small enterprises, private firms, and high marketization areas.
{"title":"Regional big data development and corporate financial fraud","authors":"Lei Yin , Guanglin Sun , Tao Kong","doi":"10.1016/j.pacfin.2025.102693","DOIUrl":"10.1016/j.pacfin.2025.102693","url":null,"abstract":"<div><div>This study establishes a theoretical framework examining how regional big data development on advancement influences corporate financial fraud. Through empirical analysis utilizing data from China's A-share listed companies 2014 to 2021, the research reveals that fostering big data development inhibits financial fraud in corporations. This effect is attributed to the alleviation of corporate financing constraints and reduction in financial leverage. Regional big data development can reduce corporate financial fraud by lowering agency costs. Heterogeneity tests indicate a notable impact in large enterprises, state-owned entities, and enterprises in high marketization regions, whereas the effect is not significant in small enterprises, private firms, and high marketization areas.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"90 ","pages":"Article 102693"},"PeriodicalIF":4.8,"publicationDate":"2025-02-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143339841","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-02-03DOI: 10.1016/j.pacfin.2025.102688
Xu Cheng , Jiancheng Chen , Yan Sheng
The digital era brings new opportunities and challenges to stock market efficiency, in which digital government construction emerges and provides a new method to influence stock pricing efficiency. This study examines the effect of digital government construction on stock price synchronicity using a Chinese quasi-natural experiment of the construction of the Big Data Bureau. We conduct a staggered difference-in-differences model and find that digital government construction significantly enhances stock price synchronicity. Mechanism analysis shows that digital government construction mitigates investor disagreement and optimizes corporate governance, which helps improve the content of market-wide information and reduce market noise. Heterogeneity tests show that the impact of digital government construction on stock price synchronicity is more significant with high economy policy uncertainty and poor information environment, as well as in cities with high economic development levels and innovation capacity. Digital government construction also has economic consequences in that its impact on stock price synchronicity is associated with increased firm value and mitigation of stock mispricing. Our study provides insights into how government reform in the digital era facilitates improving stock pricing efficiency.
{"title":"Digital government construction and stock price synchronicity: Evidence from China","authors":"Xu Cheng , Jiancheng Chen , Yan Sheng","doi":"10.1016/j.pacfin.2025.102688","DOIUrl":"10.1016/j.pacfin.2025.102688","url":null,"abstract":"<div><div>The digital era brings new opportunities and challenges to stock market efficiency, in which digital government construction emerges and provides a new method to influence stock pricing efficiency. This study examines the effect of digital government construction on stock price synchronicity using a Chinese quasi-natural experiment of the construction of the Big Data Bureau. We conduct a staggered difference-in-differences model and find that digital government construction significantly enhances stock price synchronicity. Mechanism analysis shows that digital government construction mitigates investor disagreement and optimizes corporate governance, which helps improve the content of market-wide information and reduce market noise. Heterogeneity tests show that the impact of digital government construction on stock price synchronicity is more significant with high economy policy uncertainty and poor information environment, as well as in cities with high economic development levels and innovation capacity. Digital government construction also has economic consequences in that its impact on stock price synchronicity is associated with increased firm value and mitigation of stock mispricing. Our study provides insights into how government reform in the digital era facilitates improving stock pricing efficiency.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"90 ","pages":"Article 102688"},"PeriodicalIF":4.8,"publicationDate":"2025-02-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143421874","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-02-03DOI: 10.1016/j.pacfin.2025.102698
Li Ma, Jiazhu Li
Drawing on a comprehensive sample of board meetings from Chinese listed companies between 2005 and 2022, this study systematically investigates the impact of remote board meetings on the voting behavior of independent directors. The findings indicate that, relative to traditional face-to-face meetings, remote meetings significantly increase the likelihood of independent directors expressing dissent. Further analysis of the underlying mechanisms reveals that remote meetings foster dissenting behavior by reducing independent directors' perceived power distance and enhancing their diligence in fulfilling their duties. Additionally, the effect of remote meetings on dissenting behavior is more pronounced in companies with greater board-level hierarchical divergence, characterized by lower independent director compensation, greater internal pay disparity, weaker informal hierarchies, and higher board shareholding. Finally, remote board meetings also have a spillover effect, improving the diligence of independent directors in other boards where they hold concurrent directorships.
{"title":"Do remote meetings and board hierarchy impact the voting behavior of independent board directors?","authors":"Li Ma, Jiazhu Li","doi":"10.1016/j.pacfin.2025.102698","DOIUrl":"10.1016/j.pacfin.2025.102698","url":null,"abstract":"<div><div>Drawing on a comprehensive sample of board meetings from Chinese listed companies between 2005 and 2022, this study systematically investigates the impact of remote board meetings on the voting behavior of independent directors. The findings indicate that, relative to traditional face-to-face meetings, remote meetings significantly increase the likelihood of independent directors expressing dissent. Further analysis of the underlying mechanisms reveals that remote meetings foster dissenting behavior by reducing independent directors' perceived power distance and enhancing their diligence in fulfilling their duties. Additionally, the effect of remote meetings on dissenting behavior is more pronounced in companies with greater board-level hierarchical divergence, characterized by lower independent director compensation, greater internal pay disparity, weaker informal hierarchies, and higher board shareholding. Finally, remote board meetings also have a spillover effect, improving the diligence of independent directors in other boards where they hold concurrent directorships.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"90 ","pages":"Article 102698"},"PeriodicalIF":4.8,"publicationDate":"2025-02-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143339839","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-02-01DOI: 10.1016/j.pacfin.2024.102590
Jian Zhang , Wenruo Wu , Jingyun Yang , Yi Xiao
This paper investigates the impact of trade policy uncertainty on corporate innovation, by exploiting the exogenous shock from the US-China trade war starting in 2018, which substantially increases the trade policy uncertainty (TPU) for firms in China. Using the propensity score matching and difference-in-differences approach, we find that Chinese firms with more foreign sales generate less innovation outcomes following the trade war, as measured by patents and citations, with less patent originality and exploration. The effect is more pronounced for firms with less government subsidies and less tax benefits, for firms with greater financial constraints and less cash holding, and for firms with higher customer concentration. Further analyses show that liquidity concern and the cost of capital are the main channels, through which TPU exposure affects innovation.
{"title":"Trade policy uncertainty and corporate innovation —Evidence from the US-China trade war","authors":"Jian Zhang , Wenruo Wu , Jingyun Yang , Yi Xiao","doi":"10.1016/j.pacfin.2024.102590","DOIUrl":"10.1016/j.pacfin.2024.102590","url":null,"abstract":"<div><div>This paper investigates the impact of trade policy uncertainty on corporate innovation, by exploiting the exogenous shock from the US-China trade war starting in 2018, which substantially increases the trade policy uncertainty (TPU) for firms in China. Using the propensity score matching and difference-in-differences approach, we find that Chinese firms with more foreign sales generate less innovation outcomes following the trade war, as measured by patents and citations, with less patent originality and exploration. The effect is more pronounced for firms with less government subsidies and less tax benefits, for firms with greater financial constraints and less cash holding, and for firms with higher customer concentration. Further analyses show that liquidity concern and the cost of capital are the main channels, through which TPU exposure affects innovation.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"89 ","pages":"Article 102590"},"PeriodicalIF":4.8,"publicationDate":"2025-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143161220","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-02-01DOI: 10.1016/j.pacfin.2024.102613
Yuting Li , Jianye Huang
This paper examines the governance effect of the operation and investment accountability (OIA) on merger and acquisition (M&A) performance of Chinese state-owned enterprises (SOEs). Using the OIA system as a policy shock, we employ a staggered DID estimation and find that the implementation of the OIA system significantly improves SOEs' M&A performance, which holds robust after multiple tests. The mechanism analysis reveals that OIA increases post-M&A value by reducing the ineffective M&A and improving M&A integration quality. The heterogeneity analysis indicates that the effect of OIA is more pronounced in samples with larger transaction value, lower asset loss recognition standards, local SOEs, and better institutional environments. This paper contributes to the literature on M&A performance drivers and provides empirical evidence on the role of accountability in corporate governance.
{"title":"The accountability system for operation and investment and M&A performance of state-owned enterprises in China","authors":"Yuting Li , Jianye Huang","doi":"10.1016/j.pacfin.2024.102613","DOIUrl":"10.1016/j.pacfin.2024.102613","url":null,"abstract":"<div><div>This paper examines the governance effect of the operation and investment accountability (OIA) on merger and acquisition (M&A) performance of Chinese state-owned enterprises (SOEs). Using the OIA system as a policy shock, we employ a staggered DID estimation and find that the implementation of the OIA system significantly improves SOEs' M&A performance, which holds robust after multiple tests. The mechanism analysis reveals that OIA increases post-M&A value by reducing the ineffective M&A and improving M&A integration quality. The heterogeneity analysis indicates that the effect of OIA is more pronounced in samples with larger transaction value, lower asset loss recognition standards, local SOEs, and better institutional environments. This paper contributes to the literature on M&A performance drivers and provides empirical evidence on the role of accountability in corporate governance.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"89 ","pages":"Article 102613"},"PeriodicalIF":4.8,"publicationDate":"2025-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143161131","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-02-01DOI: 10.1016/j.pacfin.2024.102596
Zhao Liu, Huawei Zhu
Patent pledge financing (PPF), emerging as the unification of knowledge capital and financial resources, not only enhances the value of firms' intellectual property but also offers new insights into addressing corporate financing challenges. However, the impact of PPF on corporate investment remains unclear. This study utilizes data from Chinese A-share listed companies to assess how the implementation of PPF pilot policies influences corporate investment through the construction of a difference-in-differences model. We reveal that the PPF pilot policies have significantly stimulated corporate investment by lowering debt financing costs and concurrently expanding investment opportunities. Subsequent analyses suggest that the impact of PPF pilot policies on corporate investment is more pronounced for companies facing higher financing constraints, possessing greater patent value, and operating in regions with lower levels of financial development. This research provides empirical support for the notion that financial innovation mitigates corporate financing challenges and fosters economic growth.
{"title":"Impacts of patent pledge financing on corporate investment: Evidence from a quasi-natural experiment in China","authors":"Zhao Liu, Huawei Zhu","doi":"10.1016/j.pacfin.2024.102596","DOIUrl":"10.1016/j.pacfin.2024.102596","url":null,"abstract":"<div><div>Patent pledge financing (PPF), emerging as the unification of knowledge capital and financial resources, not only enhances the value of firms' intellectual property but also offers new insights into addressing corporate financing challenges. However, the impact of PPF on corporate investment remains unclear. This study utilizes data from Chinese A-share listed companies to assess how the implementation of PPF pilot policies influences corporate investment through the construction of a difference-in-differences model. We reveal that the PPF pilot policies have significantly stimulated corporate investment by lowering debt financing costs and concurrently expanding investment opportunities. Subsequent analyses suggest that the impact of PPF pilot policies on corporate investment is more pronounced for companies facing higher financing constraints, possessing greater patent value, and operating in regions with lower levels of financial development. This research provides empirical support for the notion that financial innovation mitigates corporate financing challenges and fosters economic growth.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"89 ","pages":"Article 102596"},"PeriodicalIF":4.8,"publicationDate":"2025-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143160662","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-02-01DOI: 10.1016/j.pacfin.2024.102612
Nana Chai , Mohammad Zoynul Abedin , Lian Yang , Baofeng Shi
Artificial intelligence stimulates the vitality of microcredit by reshaping credit risk evaluation models, especially targeting the group of farmers. Therefore, the paper aims to establish a new interpretable hybrid ensemble model for evaluating the credit risk of microfinance for farmers, which is called ADASYN (Adaptive Synthetic Sampling)-LCE (Local Cascade Ensemble)-Shapash. It integrates the advantages of three ensemble models: bagging, boosting, and local cascading, including reducing model variance, reducing model bias, and simplifying complex problems by learning different parts of the training data. And it alleviates the problem of low generalization performance of traditional ensemble models caused by imbalanced loan data of farmers. Through the empirical analysis of the data of farmers' loans of China poverty alleviation agency “CHONGHO BRIDGE”, it is found that its average rank is 2.1, which is better than other integrated models in the credit risk evaluation of farmers' microfinance. Finally, the global and local interpretation of our model is preliminarily explored.
{"title":"Farmers' credit risk evaluation with an explainable hybrid ensemble approach: A closer look in microfinance","authors":"Nana Chai , Mohammad Zoynul Abedin , Lian Yang , Baofeng Shi","doi":"10.1016/j.pacfin.2024.102612","DOIUrl":"10.1016/j.pacfin.2024.102612","url":null,"abstract":"<div><div>Artificial intelligence stimulates the vitality of microcredit by reshaping credit risk evaluation models, especially targeting the group of farmers. Therefore, the paper aims to establish a new interpretable hybrid ensemble model for evaluating the credit risk of microfinance for farmers, which is called ADASYN (Adaptive Synthetic Sampling)-LCE (Local Cascade Ensemble)-Shapash. It integrates the advantages of three ensemble models: bagging, boosting, and local cascading, including reducing model variance, reducing model bias, and simplifying complex problems by learning different parts of the training data. And it alleviates the problem of low generalization performance of traditional ensemble models caused by imbalanced loan data of farmers. Through the empirical analysis of the data of farmers' loans of China poverty alleviation agency “CHONGHO BRIDGE”, it is found that its average rank is 2.1, which is better than other integrated models in the credit risk evaluation of farmers' microfinance. Finally, the global and local interpretation of our model is preliminarily explored.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"89 ","pages":"Article 102612"},"PeriodicalIF":4.8,"publicationDate":"2025-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143161221","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-31DOI: 10.1016/j.pacfin.2025.102697
You Wu , Wanyu Xu , Yun Zhang , Yingfei Zheng
Established firms often pursue technology and growth opportunities by investing in startups through corporate venture capital (CVC), which has a complex impact on their internal R&D activities. CVC, operating across organizational boundaries, needs to address two critical issues: external search and internal integration. However, it is driven by two incongruent institutional logics: ‘integrated’ and ‘arm's-length,’ which influence the effectiveness of the strategy implementation and its' synergistic effects on internal innovation. Using data from Chinese publicly listed firms between 2005 and 2020, our quadratic regression models with panel data reveal an inverted-U relationship between CVC intensity and internal R&D efforts. Such a relationship is more salient for less knowledge-intensive firms, smaller firms, and non-state-owned enterprises. Furthermore, the effectiveness of this activity is greatly conditioned on its implementation and the firm's technological capabilities. We find that strategic measures such as appointing senior managers to oversee CVC activities, establishing multiple CVC units, and advancing digitalization can amplify the positive effects of CVC on R&D. Our research sheds light on how CVC strategy implementation and digitalization can improve the synergy between external knowledge exploration and internal innovation.
{"title":"Improving the synergy between corporate venture capital and internal innovation: Role of implementation strategy and firm digitalization","authors":"You Wu , Wanyu Xu , Yun Zhang , Yingfei Zheng","doi":"10.1016/j.pacfin.2025.102697","DOIUrl":"10.1016/j.pacfin.2025.102697","url":null,"abstract":"<div><div>Established firms often pursue technology and growth opportunities by investing in startups through corporate venture capital (CVC), which has a complex impact on their internal R&D activities. CVC, operating across organizational boundaries, needs to address two critical issues: external search and internal integration. However, it is driven by two incongruent institutional logics: ‘integrated’ and ‘arm's-length,’ which influence the effectiveness of the strategy implementation and its' synergistic effects on internal innovation. Using data from Chinese publicly listed firms between 2005 and 2020, our quadratic regression models with panel data reveal an inverted-U relationship between CVC intensity and internal R&D efforts. Such a relationship is more salient for less knowledge-intensive firms, smaller firms, and non-state-owned enterprises. Furthermore, the effectiveness of this activity is greatly conditioned on its implementation and the firm's technological capabilities. We find that strategic measures such as appointing senior managers to oversee CVC activities, establishing multiple CVC units, and advancing digitalization can amplify the positive effects of CVC on R&D. Our research sheds light on how CVC strategy implementation and digitalization can improve the synergy between external knowledge exploration and internal innovation.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"90 ","pages":"Article 102697"},"PeriodicalIF":4.8,"publicationDate":"2025-01-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143387446","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-30DOI: 10.1016/j.pacfin.2025.102695
Feng He , Guanchun Liu , Yuanyuan Liu , Jinyu Yang
This paper investigates how inventor executive turnover affects inventors' high-quality innovation behaviors using data from Chinese high-tech listed companies from 2007 to 2018. We find that inventor executive turnover significantly enhances the quality of inventors' innovation, and this positive effect depends on the characteristics of the departing executive and their successor as well as the firm's reliance on innovation. Further, the mechanism tests show that increasing innovation quality is mainly reflected in non-cooperative inventors and non-core research and development (R&D) team inventors, and inventor executive turnover leads to more new inventors and higher innovation efficiency, which is consistent with the resource reallocation channel. We also find that the resource reallocation effect is stronger for general inventor executives rather than top inventor executives (CEO or chairman), and that inventor executive turnover boosts the total number of patent applications and the share of invention patents at the firm level. Overall, our findings suggest that to realize innovation-driven growth regime, inventors' efforts should be stimulated by optimizing the allocation of R&D resources.
{"title":"Inventor executive turnover and inventors' high-quality innovation in China","authors":"Feng He , Guanchun Liu , Yuanyuan Liu , Jinyu Yang","doi":"10.1016/j.pacfin.2025.102695","DOIUrl":"10.1016/j.pacfin.2025.102695","url":null,"abstract":"<div><div>This paper investigates how inventor executive turnover affects inventors' high-quality innovation behaviors using data from Chinese high-tech listed companies from 2007 to 2018. We find that inventor executive turnover significantly enhances the quality of inventors' innovation, and this positive effect depends on the characteristics of the departing executive and their successor as well as the firm's reliance on innovation. Further, the mechanism tests show that increasing innovation quality is mainly reflected in non-cooperative inventors and non-core research and development (R&D) team inventors, and inventor executive turnover leads to more new inventors and higher innovation efficiency, which is consistent with the resource reallocation channel. We also find that the resource reallocation effect is stronger for general inventor executives rather than top inventor executives (CEO or chairman), and that inventor executive turnover boosts the total number of patent applications and the share of invention patents at the firm level. Overall, our findings suggest that to realize innovation-driven growth regime, inventors' efforts should be stimulated by optimizing the allocation of R&D resources.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"90 ","pages":"Article 102695"},"PeriodicalIF":4.8,"publicationDate":"2025-01-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143339840","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-29DOI: 10.1016/j.pacfin.2025.102694
Wenda Song , Jiawen Wu , Haiyang Zhang
Effective Fintech regulation requires not only the establishment of regulatory policies but also effective enforcement of regulatory strategies by the government. In this paper, we focus on the role of local governments as financial regulatory enforcers and study the impact of government financial regulatory strategies on the resolution of local problematic financial institution risks. Using manually collected financial regulatory information from both central and local government websites in China, we quantify the financial regulatory strategies of local governments from three perspectives: the intensity of local regulatory enforcement, the depth of local responses to central policies, and the degree of alignment between local and central regulatory goals. We employ the Cox proportional hazards model and competing risk model on P2P platform event data, revealing that P2P platform risks are significantly lower in regions with more intensive regulation enforcement, deeper responses to central policies, and better alignment of local goals with those of the central government. We analyze the theoretical mechanisms of the above empirical findings using institutional theory, decentralization theory, and policy uncertainty theory. Robustness checks using alternative regulatory and P2P platform risk measurements, instrumental variable methods and alternative samples yield consistent results. Heterogeneity analysis reveals that government regulatory strategies have a greater impact on the risks of large platforms and platforms headquartered in provincial capitals. Our study contributes to a deeper understanding of the role of governments in financial regulation with new empirical evidence and reveals the theoretical mechanisms through which government regulatory strategies work, expanding the theoretical boundaries of research in the field of financial regulation.
{"title":"Financial risk soft landing: Government regulatory strategies and the resolution of problematic financial institutions","authors":"Wenda Song , Jiawen Wu , Haiyang Zhang","doi":"10.1016/j.pacfin.2025.102694","DOIUrl":"10.1016/j.pacfin.2025.102694","url":null,"abstract":"<div><div>Effective Fintech regulation requires not only the establishment of regulatory policies but also effective enforcement of regulatory strategies by the government. In this paper, we focus on the role of local governments as financial regulatory enforcers and study the impact of government financial regulatory strategies on the resolution of local problematic financial institution risks. Using manually collected financial regulatory information from both central and local government websites in China, we quantify the financial regulatory strategies of local governments from three perspectives: the intensity of local regulatory enforcement, the depth of local responses to central policies, and the degree of alignment between local and central regulatory goals. We employ the Cox proportional hazards model and competing risk model on P2P platform event data, revealing that P2P platform risks are significantly lower in regions with more intensive regulation enforcement, deeper responses to central policies, and better alignment of local goals with those of the central government. We analyze the theoretical mechanisms of the above empirical findings using institutional theory, decentralization theory, and policy uncertainty theory. Robustness checks using alternative regulatory and P2P platform risk measurements, instrumental variable methods and alternative samples yield consistent results. Heterogeneity analysis reveals that government regulatory strategies have a greater impact on the risks of large platforms and platforms headquartered in provincial capitals. Our study contributes to a deeper understanding of the role of governments in financial regulation with new empirical evidence and reveals the theoretical mechanisms through which government regulatory strategies work, expanding the theoretical boundaries of research in the field of financial regulation.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"90 ","pages":"Article 102694"},"PeriodicalIF":4.8,"publicationDate":"2025-01-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143349317","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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