Chao Ma and Shuoxun Zhang*
Journal of Development Economics, 2024 March
AMES 2021, AREUEA International 2021, FMA 2021, CFRC 2022, CICF 2022
We show that house price appreciation elevates financial institutions’ financing costs because it can make households invest more in houses and invest less in or require higher returns on other assets. For identification, we employ the unique feature of wealth management products (WMPs, the largest component of China’s shadow-banking sector) that the issuing markets are local whereas the markets of some products’ underlying assets are national. Stocks, bonds, and deposits do not possess this feature. We find that house price growth raises WMPs’ expected returns offered by banks. Household-level analyses further confirm that house price growth reduces households’ WMP-investment demands.
Shao-Chieh Hsueh, Shuying Jiang, Shuoxun Zhang*
Emerging Markets Finance and Trade
This paper studies whether digital financial development encourages rural-urban migrants to settle down for a longer period of time. Using data from the China Migrants Dynamic Survey (CMDS) for periods 2014–2018, our results support an overall facilitating effect in the decision to stay for the long-term from a digital finance perspective. The effect of digital finance is more pronounced for migrants who are internet users, above high-school education, younger than 35 years old, with urban hukou, or intra-provincial migrants. Moreover, the availability of the formal finance supports long-term settlement for migrants who are older than 35, inter-provincial migrants, or self-employed.
Liming Hou, Shao-Chieh Hsueh, Shuoxun Zhang
Emerging Markets Finance and Trade, 2021
We explain the stimulating effect of digital payments on households’ consumption using mental accounting theory. With the China Household Finance Survey (CHFS) data in 2017, we empirically identify that households who use digital payments spend 20.63% more than those with alternative payment methods. From the mental accounting perspective, we argue that using digital payments increase consumers’ transaction utility, facilitate intentional adjustment of mental accounts, and result in more unplanned consumption. The stimulating effect is more substantial on long-term consumption and among households with low self-control abilities. Moreover, the integrated financial services provide access to liquidity and help smooth
consumption.
BANK COMPETITION UNDER DEREGULATION:
EVIDENCE FROM WEALTH MANAGEMENT PRODUCT MARKET
Liming Hou, Shao-Chieh Hsueh, Shuoxun Zhang
IIOC, 2021; CICF, 2021
We investigate banks’ issuance decisions of wealth management products (WMPs), which are both interest-rate deregulation vehicles and shadow deposits without explicit government insurance. Support for an inverted-U shape between market share and WMP issuance is found. In the national market, big banks are reluctant to issue WMPs due to their monopoly power, while very small banks do not have the capacity to issue. Banks that are regulatory constrained or less geographically diversified have higher incentive to issue WMPs. Taking advantage of the differentiated market structures of issuing regions, we can identify banks’ heterogeneous WMP issuance decisions in local markets. Incumbent banks use WMPs to fight off new entering competitors, but their marginal incentive is weaker.
