This paper first investigates the impact of social temporal and spatial changes on capital allocation efficiency. Applying the PSM-DID quasi experimental method, this paper finds that the development of modern transportation and information technology can greatly promote the information efficiency of capital market. After constructing a composite home bias index that integrates investors (distinguishing retail investors and institutional investors) and third-party audit and regulatory institutions (including audit institutions, law firms and asset evaluation), we show that home bias plays a significant mediating role in this impact. We further find that this effect varies systematically with firms' disclosure proactiveness, industry-level information barriers, and the level of regional economic development. Our findings remain robust after conducting placebo test and adopting alternative definitions of social temporal and spatial changes.
This paper examines how U.S.-China bilateral tensions have evolved in the transmission of systemic risk across major asset classes. Using a time-varying parameter vector autoregression (TVP-VAR) connectedness framework, we incorporate the newly developed U.S.-China Tension (UCT) Index alongside key financial variables, equity indices (S&P 500, CSI 300), commodities (Gold, Oil), the USD/CNY exchange rate, and the VIX. Our findings reveal a structural shift between two distinct periods. During the pre-trade war era of globalization, systemic risk spillovers were primarily transmitted through the UCT Index, USD/CNY, gold, and the U.S. market, while the Chinese market, oil, and VIX mainly absorbed shocks. However, in the trade war and COVID-19 pandemic period, the Chinese market and gold emerged as the dominant transmitters of systemic risk, while the UCT Index transitioned from a shock originator to a more passive role, suggesting that it reflects periods of systemic financial stress more than it directly drives them, with its influence remaining generally mild and time-dependent. The robustness of these results is supported by analyses with various measures of uncertainty, alternative sample partitions, burn-in diagnostics, and alternative transformations of UCT. These findings highlight the importance for policymakers, central banks, and investors to include geopolitical indicators in financial stability surveillance and to adjust risk management strategies to the more dynamic and interconnected global financial landscape.
This study examines whether blockchain-based transaction infrastructure shapes firms' vertical boundaries. Using data on Chinese listed firms from 2011 to 2024, we exploit the staggered provincial rollout of blockchain e-invoicing as a quasi-natural experiment and find that it significantly reduces firms' vertical integration, suggesting that blockchain-based transaction records reduce firms' reliance on internal organization. Mechanism analyses indicate that blockchain e-invoicing reduces firms' vertical integration by lowering firms' invoice processing costs, particularly for firms with higher administrative expenses and more subsidiaries, and by reducing firms' partner verification costs, especially for firms with poorer information quality and fewer related-party transactions. Heterogeneity analyses further show that the effect is more pronounced for firms with weaker bargaining power and higher internal governance costs. Additional analyses reveal that blockchain e-invoicing reduces vertical mergers and acquisitions and improves accounts receivable turnover. Overall, our findings provide new evidence that blockchain adoption can reshape firm boundaries by reducing external transaction costs and facilitating greater vertical specialization.
This study examines the causal effect of air pollution on mutual fund managers' portfolio pumping using a large sample of Chinese mutual funds. We find that higher air pollution significantly increases portfolio pumping. Mechanism test shows that pollution induces short-term opportunistic behavior through elevated portfolio turnover, which facilitates return manipulation. This effect is stronger when peer monitoring is weaker, managerial workload is higher, reputational pressure is lower, and stakeholder attention is limited. Causal identification relies on thermal inversions, the Beijing Olympic Games, and the Qinling-Huai River heating policy. Our findings highlight how environmental conditions shape managerial behavior and financial market outcomes.
Under the right conditions, foreign exchange intervention (FXI) plays an important role in stabilising currencies in emerging markets. Using a panel smooth transition regression model for 20 emerging economies and an instrumented FXI measure to address endogeneity, the paper finds that central banks lean against the wind of currency depreciation and appreciation and respond to deviations from long-run exchange rate targets. The effectiveness of FXI is state-dependent and varies with prevailing macroeconomic conditions, particularly exchange rate volatility and inflation differentials. FXI is not statistically significant in low-volatility regimes but becomes effective in high-volatility regimes, suggesting that intervention has a stronger influence on exchange rates when market pressures are elevated. Similarly, FXI is effective in high-inflation regimes, where it helps counteract inflation-induced depreciation pressures. These findings highlight the need for central banks to tailor the size and timing of FXI to prevailing economic conditions. In high-volatility environments, intervention can play an important stabilising role, while in high-inflation regimes its signalling channel can communicate a credible commitment to currency stability and help anchor market expectations. Central banks should also balance the frequency of interventions, using clustered actions where appropriate to reduce operational costs.
