Table 4 - uploaded by Meijun Qian
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In this paper we examine and compare the legal and institutional set-ups in China and India. China differs from most of the countries studied in the law, institutions, finance, and growth literature: Its legal and financial systems as well as institutions are all underdeveloped, but its economy has been growing at a very fast rate. Despite its Engl...
Contexts in source publication
Context 1
... fast growth of China's stock markets notwithstanding, these markets are not efficient in that prices and investor behavior do not reflect fundamental values of listed firms. In Table 4, "Concentration" measures the fraction of total turnover of the market in 2006 that is due to the trading and turnover of companies within the largest market capitalization quintile. Large-cap stocks in China are not frequently traded and the concentration ratio, 31%, is much lower than in any other major stock exchange in the world except for NYSE. ...
Context 2
... improve the quality of government regulation, Glaeser, Johnson, and Shleifer (2001) argue that regulators must be properly motivated. The concentration and turnover velocity of China's markets (Table 4) were actually even higher in the late 1990s, and the improvement since then has been, in part, due to advances in the quality of regulation. ...
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Citations
... Informal finance is based on relationships and reputation and information asymmetries between informal lenders and their borrowers are less important. The loan application process is lighter and the collateral required is easier to satisfy (Allen et al., 2010). ...
This study assesses financial determinants of informal financial sector development in 48 Sub-Saharan African countries for the period 1995-2017. Quantile regressions are used as the empirical strategy which enables the study to assess the determinants throughout the conditional distribution of informal sector development dynamics. The following financial determinants affect informal financial development and financial informalization differently in terms of magnitude and sign: bank overhead costs; net internet margin; bank concentration; return on equity; bank cost to income ratio; financial stability; loans from non-resident banks; offshore bank deposits and remittances. The determinants are presented from a plethora of perspectives, inter alia: U-Shape, S-Shape and positive or negative thresholds. The study not only provides a practical way by which to assess the incidence of financial determinants on informal financial sector development, but also provides financial instruments by which informal financial development can be curbed.
... In the same vein, corporate finance is usually independent from international finance but dominated by internal funds or public bank credit. Hence, there is a strong role for the state for the provision of firm financing, complemented by policies to potentially restrict cross-border financial flows and limit volatility (Allen et al., 2010;Gallagher, 2014). ...
While growth in India stayed relatively stable over the last decade, Brazil fell into deep recession and a fundamental political and economic crisis. Why did these two countries, despite their similarities, diverge so massively within only 10 years? Through a paired comparison, this article probes two alternative approaches to capitalist diversity to explain the divergence among two rising economic powers and ‘state capitalisms’. It finds that through the lens of a firm-centred supply-side approach, one largely sees institutional stability in both economies, while a focus on the demand side and respective growth models makes visible fundamental destabilization in Brazil. The fragility of domestic demand, the vulnerability of global economic integration and the erosion of key social coalitions, we contend, are key to unpack the divergence between Brazil and India. This study thereby not only sheds a new light on emerging market capitalism but also discusses further possibilities for the analysis of state capitalism within comparative political economy.
... Informal finance is based on relationships and reputation and information asymmetries between informal lenders and their borrowers are less important. The loan application process is lighter and the collateral required is easier to satisfy (Allen et al., 2010). ...
This study assesses financial determinants of informal financial sector development in 48 Sub-Saharan African countries for the period 1995-2017. Quantile regressions are used as the empirical strategy which enables the study to assess the determinants throughout the conditional distribution of informal sector development dynamics. The following financial determinants affect informal financial development and financial informalization differently in terms of magnitude and sign: bank overhead costs; net internet margin; bank concentration; return on equity; bank cost to income ratio; financial stability; loans from non-resident banks; offshore bank deposits and remittances. The determinants are presented from a plethora of perspectives, inter alia: U-Shape, S-Shape and positive or negative thresholds. The study not only provides a practical way by which to assess the incidence of financial determinants on informal financial sector development, but also provides financial instruments by which informal financial development can be curbed.
... 7 Market forces such as mergers and acquisitions among broker firms have little impact in China because the industry is closely regulated. Allen et al. (2010) show that China was ranked among the worstscoring countries in terms of legal formalism and property right protection. a broker firm's organizational structure change has significant effects on its analysts' ethical behavior, as measured by their recommendations. This has not been explored in the literature. ...
We investigate how a broker firm’s initial public offering (IPO) affects its analysts’ fiduciary duty of providing independent and objective recommendations. We find that the analysts of newly listed broker firms issue more positively biased recommendations in the first 2 to 3 years after their employers’ IPO than before the IPO. The increase in the recommendation bias is greater among analysts of affiliated brokers and brokers that raise additional capital after their IPO than among other analysts. Newly listed broker firms experience significant increases in revenue and trading commission, and the increases are positively related to recommendation bias, after controlling for many other factors. More importantly, recommendation bias decreases as newly listed broker firms season and as the importance of trading commission declines. This suggests that public exposure through a broker firm’s IPO does not enhance the integrity and professional conduct of its financial analysts. Rather, economic incentives make financial analysts more accepting of unethical behavior. The overall results imply that the public trading of financial gatekeepers compromises the ethical relationship between financial service professionals and society in general.
... Estimates of this relationship are per se important given the lack of research on the impact of alcohol regulation in the context of developing countries, where costs of alcohol use are arguably larger. 2 There is also evidence that easily evaded state-level regulations are less effective at reducing alcohol consumption (Dills and Miron 2004;Lovenheim and Slemrod 2010). It follows that an important question facing policy makers in developing countries is whether government regulation is effective at all, particularly in the presence of strong black markets and perceived weaker rule of law relative to the USA or Canada (Allen et al. 2008). ...
We provide quasi-experimental evidence on the effects of alcohol regulation on alcohol consumption and associated public health outcomes using detailed individual level and aggregate data from India, where state-level laws regulating the minimum legal drinking age generate substantial variation in the availability of commercially produced alcohol across people of different ages. We find that despite significant law evasion, men who are legally allowed to drink are substantially more likely to consume alcohol. Further, men who are legally allowed to drink are significantly more likely to commit violence against their partners, suggesting a causal channel between alcohol consumption and domestic violence. These results are robust to the exclusion of states with prohibition, implying that they are driven by differences in MLDA. We also examine the effects of alcohol regulation on other public health outcomes. Consistent with the existing literature, we find evidence that smoking and drinking are complements. Finally, we provide suggestive evidence that stricter alcohol control is associated with lower rates of motor vehicle accidents and crimes against women, but not other forms of crime.
... 6 Market forces such as merger and acquisition between brokers have little impact in China because the industry is closely regulated. Allen et al. (2010) show that China was ranked among the worst-scored countries in terms of legal formalism and property right protection. raising capital through IPOs, broker firms expand quickly into other business areas. ...
... Stiglitz (2013), p. 98. 71Allen et al. (2010), p. 140. 72 Arner (2007, p. 323. ...
Finance has become an indispensable vehicle for economic development in emerging economies. Such economic progress involves a number of human rights implications which affect financial products, the entitlements of the banking sector itself as well as broad matters of socio-political and -economic justice. Such asymmetries and inequalities find their way into those debates on financial reform and regulation where a tension persists between the sustainability of economic objectives and political stability in fast-developing economies and especially in mainland China. Thus, financial governance and regulation has to take into account these various stare- and stakeholders to match both the short-term profit goals of the financial sector and the longterm socio-economic, environmental, political objectives of the nation in question. Such balancing act will proof to be crucial to ensure further market access, financial innovation and accountability for bankers, investors, regulators, and policy-makers alike. It remains to be seen how China will be in the position-both ideologically and economically-to offer such guarantees in the short or long-term and resist or accommodate the forces of the international financial markets.
... Estimates of this relationship are per se important given the lack of research on the impact of alcohol regulation in the context of developing countries, where costs of alcohol use are arguably larger. 2 There is also evidence that easily evaded state-level regulations are less effective at reducing alcohol consumption (Dills and Miron 2004;Lovenheim and Slemrod 2010). It follows that an important question facing policy makers in developing countries is whether government regulation is effective at all, particularly in the presence of strong black markets and perceived weaker rule of law relative to the USA or Canada (Allen et al. 2008). ...
We provide quasi-experimental evidence on the role of alcohol regulation on alcohol consumption and violence against women using detailed individual level and aggregate data from India, where state level laws generate substantial variation in the availability of alcohol across people of different ages. We find that men are more likely to drink when they are of legal drinking age, and that the wives of these men are substantially more likely to report being physically abused. We then extend our analysis to a longer panel data set of state level crime rates, and find that some evidence that higher state minimum legal drinking ages are associated with lower rates of reported crimes against women.
Trust beneficiary protection constitutes an important legal system in the trust industry. This paper, based upon the study approach of the “Theory of Law and Finance”, establishes the trust beneficiary protection index of China. We also test the influence of trust beneficiary protection on the performance of trust companies. As indicated by our study’s results, an “inverted U-shaped” relationship exists between the degree of trust beneficiary protection and the performance of trust companies. In a period when the trust law system has not yet been well established, strengthening trust beneficiary protection could help facilitate the growth of trust company performance. However, this facilitation effect gradually diminishes as the trust law system becomes more perfect. This in turn means that, after reaching a certain peak, conferring the beneficiary with more rights of supervision and participation would cause the performance of trust companies to decline. Improving regional legal environments could also help facilitate the growth of trust company performance. In addition, this facilitation effect is subject to the influence of the nature of trust company controllers. In trust companies controlled by local state-owned capitals, we find that the facilitation effect of the improvement of regional legal environments on trust company performance is inhibited. In trust companies controlled by non-state-owned capitals, however, the facilitation effect of the improvement of regional legal environments on trust company performance is enhanced.
There has been a debate on how the state-driven anticorruption movement during the Xi Jinping administration has influenced state-owned enterprises (SOEs). Research has examined the relationship between corruption and economic development at the country level in Asia and has found paradoxically that economic growth and high corruption levels can coexist. However, the “Asian paradox” that appears at the country level may be a transitional phenomenon of the short term. Not many researchers have empirically compared individual firm-level performance before and after a strong anticorruption drive, drawing on relevant comparison groups. This study tests whether Xi’s 2012 anticorruption campaign improved SOEs’ performance. With a difference-in-differences method, it explores whether the anticorruption campaign had different effects on the financial performance of SOEs and non-SOEs (private companies). We find that the anticorruption initiative improved SOEs’ financial performance and benefited SOEs more than non-SOEs.
