ABSTRACT The impact of climate risk on micro‐organisations has received growing attention. However, whether and how climate risk affects corporate climate governance activities is not well understood. Leveraging meteorological station data, we construct firm‐level climate risk index to examine this relationship across Chinese listed firms during 2011–2020. Results demonstrate that green patent quality is diminished in response to the firms’ high level of climate risk, implying that corporate climate risk exposure tends to trigger a negative psychology of problem avoidance, which inhibits the quality of corporate green innovation. Besides, mechanism tests suggest that management emotion and management green attention are the primary channels to explain the above inhibitory effect. Further analyses reveal that this inhibitory effect is weaker for those firms with strong climate governance supervision. In a nutshell, this study provides new evidence for firms to objectively understand and mitigate adverse climate impacts by documenting the impact of Chinese firm‐level climate risks on green innovation quality.
This article investigates the changes in the structure of employment in Central and Eastern European firms between 2001 and 2007, before the Global Financial Crisis and following the reforms in the labour and credit markets in these economies. By linking firms' workforce restructuring to their access to credit, this article interrogates well-accepted theorisations of employment changes including those focusing on labour flexibility. From a policy perspective, these findings question the sole reliance on labour market flexibility as employment policy and advocate for a tighter coordination of labour and credit interventions to limit the negative impact on the quality of jobs of firms' credit needs.
Which extractive institutions perpetuate rural poverty in conflict-affected regions? Based upon neo-institutionalism, I examine poverty determinants across 1122 Colombian municipalities (2011-2020). Although land concentration appears to reduce poverty, correcting for endogeneity reverses this relationship, confirming its function as an extractive institution that restricts land property rights. Technical progress consistently reduces misery. Centre periphery dynamics-particularly infrastructure deficits and educational exclusion-corroborated by spatial autocorrelation prove decisive. Forced displacement and coca cultivation, rather than direct violence, drive conflict-related poverty. Effective peace transition requires transforming informal extractive norms-clientelistic land access, technological aversion, spatial exclusion and violence as conflict resolution-alongside formal institutional reforms.
This study examines the relationship between digital skill requirements and posted wages in online job advertisements in Vietnam from 2019 to 2024. Regression analyses incorporating fixed effects and augmented inverse-probability weighting (AIPW) methods indicate widespread demand for digital skills across most occupational categories. Specifically, job postings explicitly requiring digital skills offer posted wages approximately 7.9% higher compared with similar positions without these skill requirements. Further analysis by digital skill proficiency reveals that specialist digital skills are associated with the highest wage premium, reaching 9.5%. In contrast, generic and complementary digital skills yield significant but comparatively lower premiums (around 5%). Conversely, explicitly listed foundational digital skills, such as proficiency with standard office software, correlate slightly negatively with posted wages, suggesting that employers increasingly view these competencies as minimum expectations.
This study examines how relaxing internal migration restrictions affects skill upgrading of firms in developing countries, leveraging the 2014 Hukou reform in China Hukou reform as a quasi-natural experiment. In China, the Hukou reform in 2014 significantly eliminated internal migration obstacles in cities with populations below 5 million, whereas the migration obstacles in megacities remained unaffected. Utilising a difference-in-differences method, the empirical findings reveal that the relaxation of migration restrictions has significantly facilitated firms' skill upgrading as measured by the employment share of highly educated employees. The effect is more salient among firms facing more stringent financing constraints, labour-intensive firms and state-owned firms. Mechanism analysis indicates that the reform lowered settlement thresholds in treated cities, enabling firms to attract more educated employees without notable wage increases. Additionally, relaxing migration restrictions has boosted firms' total factor productivity (TFP), suggesting that greater labour mobility not only facilitates skill upgrading but also improves efficiency. These findings provide insights into the role of relaxing migration restrictions in addressing skill mismatches and fostering productivity growth in developing economies.
High-quality economic development is a prerequisite for sustainable growth. The key role is played by private companies in this domain. However, private companies often face difficulties in achieving high-quality development due to leverage control and/or credit constraints. Focusing on the bank credits, this study uses micro data of Chinese private companies from 2017 to 2022. By exploring the issues of leverage choice and allocation traps, we provide empirical evidence on how to promote the high-quality development of these firms. The benchmark regression indicates that increasing leverage can promote the high-quality development of private enterprises. In addition, the credit constraints are binding with respect to high-quality development. Second, the mechanism analysis reveals that the bank credit allocation bias exerts a negative effect, thereby weakening the role of leverage in promoting the high-quality development of private enterprises. Third, results suggest that private enterprises can enhance profitability or expand operation scale to mitigate the adverse effects of the credit allocation bias. The government policies can also be effective as suggested by the difference-in-difference model. Based on these results, policy implications are proposed for government, banks and private enterprises.
Communal land tenure, which only grants partial property rights to farm operators, is adopted in many countries. Communal property rights thereby have a limited collateralizability to support credit transactions and thus can impede productivity. This paper provides an insight into how agricultural productivity responds to an improvement in property rights of communal land, that is, the endorsement of collateralizability. We exploited the farmland operational right (FOR) pilot reform in China in 2015, which allows operational rights of communal farmland to be utilised as collateral to obtain loans from banks. The findings suggest that the agricultural productivity was significantly increased by around 2 percent in pilot counties. The increased agricultural productivity appears to be associated with enhanced access to credit and improved transferability of communal farmland. Our analysis further reveals that local governments with stable fiscal sustainability and close connections to the provincial governments benefited greatly from the FOR pilot reform with respect to agricultural productivity. China provides an institutional innovation of lifting restrictions on communal property rights without fundamentally altering land ownership to other countries.
This study investigates the impact of bank deregulation on the labour share of income in China. In 2009, the Chinese government substantially reduced market entry barriers for joint-stock and urban commercial banks, triggering a wave of expansion among small- and medium-sized bank branches. Using firm-level data from 2000 to 2013 and the stacked difference-in-differences approach, we find that bank deregulation significantly reduces firms' labour shares. The effect is more pronounced in industries with greater dependence on external financing, as well as among nonstate-owned enterprises and small and medium-sized firms. Mechanism analysis suggests that expanded branch entry alleviates firms' financial constraints, leading to increased asset investment, which crowds out wage payments because of limited internal liquidity. The entry of banks also reshapes industrial composition by attracting more capital-intensive firms. These findings highlight that credit market reforms may be important yet underexplored contributors to the decline in labour share in developing economies.
This study explores how gender is associated with microfinance loan performance in Afghanistan, a conservative and conflict-affected society. We use data from over 9500 borrowers across Taliban- and government-controlled areas for the period from January 2017 to February 2020, before the 2021 Taliban takeover. We analyse how borrower and loan officer gender are related to loan outcomes. Contrary to prevailing literature, our findings reveal that female borrowers exhibit lower loan performance compared to male borrowers, which we attribute to structural barriers such as restricted mobility, limited business opportunities and poor access to education. Female loan officers are associated with higher loan performance on average. A key finding is evidence for a matching channel: female borrowers are substantially less likely to default when paired with female loan officers, and this effect is particularly pronounced in government-controlled areas. The results highlight the value of gender-sensitive staffing and borrower-officer assignment policies for microfinance in challenging environments.
Gender equality in the economy is a key issue on the political agenda. Western countries have long pursued policies promoting free competitive markets, with the EU focusing on harmonisation for market freedom. This study examines how economic freedom impacts gender equality using an instrumental variable approach. Results reveal mixed effects: economic freedom can hinder gender equality in areas, such as work, education and power, but foster it in income and financial resources. Moreover, the same aspect of economic freedom can simultaneously advance gender equality in some domains whereas hindering it in others, highlighting the complexity of these dynamics. The results of the paper contribute to reduce inequalities within countries and to build inclusive economic systems.
This study investigates whether the establishment of environmental courts accelerates the market exit of zombie firms in China's manufacturing sector. Exploiting the staggered introduction of environmental courts across cities between 2003 and 2014, we employ a multiperiod difference-in-differences design using firm-level panel data. Our findings indicate that environmental courts significantly reduce the persistence of zombie firms. These results are robust to alternative specifications, matching methods and definitions of zombie firms. Mechanism analyses reveal that environmental courts alleviate financing constraints and strengthen performance-based selection by widening gross profit margin differentials. The effects are more pronounced in regions with greater environmental policy emphasis, more developed commercial environments and among firms with weaker liquidity. Overall, this study provides causal evidence that rule-based environmental judicial institutions can promote efficient firm exit and improve resource allocation during economic transitions.
This paper provides empirical evidence of how high-level human capital outflow could affect TFP-based economic development and vice versa. The concern of potential endogeneity between brain drain and economic development is addressed directly. First, structural break tests are employed to identify co-breaks between brain drain and growth. Results confirm that the association is plausibly bidirectional. Accordingly, a multiequation estimation methodology is employed to parameterize the association. Results suggest a negative impact of brain drain on productivity growth and that productivity growth lowers brain drain in South Africa. A set of robustness tests supports using a simultaneous equation estimation methodology for the emigration-productivity growth association.
Land reforms implemented in Cuba since 2008 have aimed to increase agricultural production by distributing state-owned idle lands with land-use rights. The reforms restricted farmers with the rights from cultivating perennial and capital-intensive crops. Thus, the reforms are expected to affect the productivity of annual crops, excluding capital-intensive crops. We exploit the exogenous restrictions to empirically analyse the impact of the reforms on agricultural productivity using the difference-in-differences method based on crop-level panel data in the nonstate sector. Our findings indicate that the 2008 reform improved the productivity of annual crops, although we noted no significant impact of the 2012 reform.
Access to legal services is argued to be an integral part of inclusive growth. This paper examines how litigation demand responds to an increased supply of legal professionals, that is, supply-induced litigation, in a developing economy using a newly constructed city-level panel dataset of litigation rate, law firms and socioeconomic variables from China throughout 2013-23. Our empirical analysis reaches several conclusions. We find that an increase in the number of law firms has a positive and significant effect on the litigation rate, which supports supply-induced litigation. This result is robust to the instrument variable (IV) estimation and several robustness checks. Further, we find that the supply-induced litigation potentially attributes to a better matching between lawyers and clients. Finally, we find that supply-induced litigation is more pronounced for cities with higher social trust. In other words, formal and informal institutions, such as social trust, are complementary in driving the use of the judicial system.
Previous studies fail to consider the importance of heterogeneity in the relationship between conflict and trade openness. In this paper, we fill this gap by using quantile regression to analyse the impact of conflict types (internal, external and global) on trade openness (de jure and de facto) in African countries over the period 1984–2017. The quantile regression approach thus enables us to identify the different responses of trade openness to conflicts at different levels of the conditional distribution of trade openness. Overall, our results show that conflicts reduce trade openness, and the impact is greater in countries with a low degree of openness. In particular, the effect of conflict types is negative, and its magnitude decreases as the level of de facto trade openness increases. On the other hand, this negative effect remains stable over the entire conditional distribution of de jure trade openness. Our results do not depend on the choice of conflict and trade openness indicators used. They suggest that countries with the lowest levels of openness are the most affected by conflict.
This paper examines how a brief armed conflict affects firm performance and survival, using evidence from Georgia following the August 2008 war. Combining firm-level survey data with geolocated information on conflict events, military installations and bank branches, the analysis reveals heterogeneous firm responses. In the short run, firms located near conflict events experienced smaller declines in sales and sales per permanent, full-time employee than nonexposed firms, despite substantial losses among young firms and exporters closest to the bombing. By 2011, surviving exposed firms outperformed nonexposed survivors in sales and labour productivity. At the same time, local armed conflict exposure increased firm exit, particularly among exporters, pointing to selective exit, reduced competition and transport disruptions as mechanisms driving the results.
The supply chain risks associated with globalisation have been continuously increasing, leading to greater uncertainty for firms. Based on a staggered difference-in-differences (DID) model and the panel data from China's A-share listed companies from 2006 to 2022, this paper examines the impact of institutional openness policies, by the establishment of Free Trade Zones (FTZs) as a quasi-natural experiment, on corporate perceptions of economic uncertainty (CPEU). The results show that institutional openness significantly reduces CPEU. This finding remains robust after conducting parallel trend test, IV test, placebo test, PSM-DID, other estimation methods, and alternative dependent variable checks. Heterogeneity analysis reveals that large-scale, private, and capital-intensive firms are more sensitive to FTZs, with a notable reduction in CPEU. Besides, firms in underdeveloped regions are more likely to be affected by FTZs. Mechanism tests indicate that FTZs primarily decrease CPEU by easing financing constraints, promoting digital transition, and improving the business environment. In the face of globalisation and industrialisation, China's institutional openness policies play a crucial role in promoting sustainable regional economic development and enhancing international competitiveness, serving as an important model for developing countries to advance institutional reforms.
This paper investigates the demographic consequences of militarisation in transition economies by analysing the effect of armed forces size on fertility rates across 15 post-Soviet countries from 1992 to 2022. Using panel fixed effects and two-stage least squares (FE-2SLS) with U.S. military aid as an instrument, we find that military expansion exerts a significant negative impact on fertility. Mediation analysis suggests that societal anxiety serves as a key channel. A case study of Russia highlights how sanctions and conflict further accelerate fertility decline. The findings underscore how institutional legacies of conscription shape demographic outcomes in transitional settings.
Using a large firm-level dataset from the World Bank Enterprise Surveys, covering 145 countries between 2006 and 2024 and comprising over 158,900 observations, we examine whether informal competition—defined as competition from informal firms—affects the credit constraints of registered firms worldwide. Estimations, based on the instrumental variable method, indicate that registered firms competing with informal firms are significantly more likely to be credit-constrained than those that do not. This finding is highly robust. The detrimental effect of informal competition diminishes with greater managerial experience, firm age, productivity, self-financing capacity and banking accessibility, as well as with stronger structural factors such as real GDP per capita, domestic credit to the private sector, regulatory quality, rule of law and control of corruption. However, the effect of informal competition increases with higher income inequality and firm size. Sales, productivity and informal payments are key transmission channels.
This article investigates financial capabilities and the role of conversion factors in the financial situation of segregated Roma families. We examine how these strategies are linked to stigmatisation and spatial segregation, pushing forward existing theories on financial capabilities of segregated Roma people. Building on a long-term collaborative process, we conducted semi-structured interviews with current and former residents of two urban segregated Roma neighbourhoods in Hungary, complemented with the data generated during our long-term observations and recorded in our research diaries. Our results show that if the aim is to promote the social inclusion of extremely poor, stigmatised and segregated Roma, it is more appropriate to focus on conversion factors emphasised by the concept of financial capability, mainly related to segregation, poverty and stigmatisation, rather than on the individual factors. Exploring these factors can lead to a meaningful understanding of the situation of the people concerned and to the formulation and development of policies that can support their financial inclusion and well-being.
