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Carbon emissions, ecological pollution and a steadily rising global temperature have been widely acknowledged as the most severe risks to human survival in the last few decades. Alarming increases in global temperature and sudden climatic shifts are nature's way of warning us to curb the use of fossil fuels and adopt more sustainable practices. Therefore, the present study investigates the impact of financial stability, environmental regulations and uncertain economic policies on carbon emissions and investment in renewable energy. The study used a nonparametric DEA‐DDF technique to fulfil this objective using a balanced panel dataset comprising 28 Chinese provinces from 2011 to 2021. Overall results demonstrated that financial stability reduces carbon emissions and accelerates investment in renewable energy projects. The findings imply that a financially stable economy like China encourages businesses to invest in cutting‐edge, environmentally friendly technology to boost productivity while reducing carbon emissions. Likewise, results show that stringent ecological regulations decrease carbon emissions and promote investment in renewable energy. Hence, stakeholders are keen to comply with environmental regulations in China to reduce carbon emissions by investing in renewable energy resources to avoid penalties. Finally, results suggest that uncertain economic policies increase carbon emissions and restrict access to credit from financial institutions for investment in renewable energy purposes in China. Findings imply that uncertainty in economic policies could lead to less environmentally friendly production practices that may increase carbon emissions and reduce the demand for renewable energy products. [ABSTRACT FROM AUTHOR]

The future of equivalence in the EU financial sector does not look all that bright. Granting third-country entities access to the EU financial markets is increasingly less about reliance on equivalent third-country rules and equivalent third-country supervision. Considerations other than equivalence are increasingly given more relative weight, either explicitly or implicitly, in particular (i) EU financial stability risks, (ii) EU market integrity, (iii) EU retail investor protection, (iv) preserving or regaining EU autonomy in an increasingly complex world (e.g., Brexit and the economic rise of China), (v) protecting EU entities against competitors from third countries, (vi) trying to conquer market share in a lucrative business (e.g., derivatives clearing), and (vii) other EU policy considerations. These considerations are gaining ground not merely in relation to the question of whether an equivalence framework should even be in place, and if so, whether equivalence decisions should indeed be taken, but also with regard to the regulatory and supervisory framework that the EU applies to (1) entities established in third countries for which the Commission has adopted equivalence decisions, and (2) third-country branches established in the EU. In view of this, the Territorial Approach and the Extra-Territorial Approach are clearly on the rise, in each case to the detriment of the Equivalence Approach. At the same time, loopholes in the execution of the Territorial Approach continue to exist at the national level, at least for the time being. [ABSTRACT FROM AUTHOR]

Purpose: This study aims to examine the impact of boardroom diversity on the financial stability of Chinese financial listed firms. Boardroom diversity is quantified in the following aspects: relation-oriented diversity and task-oriented diversity. Design/methodology/approach: Panel data on Chinese financial listed firms between 1998 and 2017 are used in this study. Panel regression is used to analyze the firm data for fixed effects and robust standard errors. Findings: Task-oriented diversity of the board increases financial stability. Regarding the impact of boardroom diversity on firm risk, the results reveal that task-oriented diversity of the board reduces firm risk, which supports the predictions of this research. Regarding the moderating effect of state ownership on the relationship between boardroom diversity (task- and relation-oriented diversity) and financial stability, the results show that state ownership enhances the positive impact of the board's task-oriented diversity on financial stability. Practical implications: Task-oriented diversity of the board enhances the financial stability of Chinese financial listed firms. As existing studies on bank boards in China are limited, the findings of this research can be used when crafting policy initiatives to enhance financial stability. Originality/value: To the best of the authors' knowledge, this study is the first to examine the effect of boardroom diversity, particularly task- and relation-oriented diversity, on financial stability. It provides empirical support that boardroom diversity positively affects the financial stability of Chinese financial listed firms. This research also offers empirical evidence that state ownership enhances the positive impact of the board's task-oriented diversity on financial stability. [ABSTRACT FROM AUTHOR]

Inefficiency and resource misallocation in the financial system, coupled with a shortage of traditional financial services, have hindered export product quality improvement in China. Against this backdrop, there is an evident need to examine the dynamics between digital finance and export product quality. Hence, this study focuses on the impact of digital finance on export product quality upgrades in China. The examination draws on panel data of 39,387 firm-level samples from 2011 to 2014. Empirical results show that digital finance helps upgrade export product quality by enhancing enterprises' financial stability. Moreover, the positive effect of the depth of digital finance usage is more pronounced than that of the breadth of digital finance coverage. Our findings imply that China must continue deepening the digital financial market and expand and improve the scope and efficiency of financial services. [ABSTRACT FROM AUTHOR]

Digital financing is an emerging source after COVID-19 to address novel problems of economies and different industries. With the growing concern about the sustainability of the global environment, developing countries are now moving toward unprecedented economic development. This research analyzes the impact of digital finance and economic growth on environmental sustainability in China from 1995 to 2020, focusing on natural resource management. To include asymmetric patterns and handle socioeconomic shocks during the last three decades, the research uses the cutting-edge ordinary least square (O.L.S.) methodology. The O.L.S. helps the research findings and illustrated patterns of ecological sustainability dependency across various data distributions. According to the empirical results, N.R., F.D.P., and G.D.P. all benefited from carbon emissions at higher and lower emissions quantiles. Green technology innovation, on the other hand, considerably reduces emissions across all quantiles. Notably, the effect of each repressor significantly changed for lower, medium, and higher emissions quantiles, showing a thorough understanding of China's resource scarcity and sustainable growth. [ABSTRACT FROM AUTHOR]

In this study, we estimate and investigate the evolution of monetary rules in China and the United States in the 21st century. Our goal is to examine whether financial stability has been taken into consideration in the decision-making of monetary policy. By proposing a new method, we estimate the structural breaks, split the entire time period into multiple monetary regimes, and estimate an extended Taylor rule with financial stability considerations and its evolution over time. Our findings show that China's monetary policy emphasized the financial stress of the U.S. immediately before and during the 2008 global financial crisis. However, the coefficient for the U.S. financial stress has decreased since then, which shows a weaker concern on this index, and instead, the Chinese policymakers are emphasizing stronger on their domestic financial market. [ABSTRACT FROM AUTHOR]

This study examines the effects of shadow banking activities on the financial stability of the Chinese banking system. Moreover, it assesses whether the relation between financial stability and shadow banking activities changes for banks having political connections. The findings suggest a significant positive effect of shadow banking on the credit risk as well as the financial stability of Chinese banks. The growth of shadow banking activities has a significantly positive effect on Chinese commercial banks lowering the default risk and this relationship is incrementally significant for financial institutions having political connections. These findings are robust by controlling for various bank-specific and macroeconomic conditions. [ABSTRACT FROM AUTHOR]

This study examines the nexus between financial stability, climate risks, GHG emission mitigation, and green economic recovery of China. Financing efforts to protect against and reduce the hazards associated with climate change need to consider these risks and resources. Study used the Kalman technique of analysis for empirical inference. This research focuses on the carbon risk in China by employing a Kalman estimation approach. Although environmental mitigation was found to be important at 39%, financial strength and carbon hazards were considerable at 34%. Moreover, the report demonstrates the relationship between climatic threats and environmental drift in China, at a rate of 17%, emphasizing the need to address climate change issues. A state's fiscal health guarantees national economic security while pursuing green economic recovery initiatives. Researchers concluded that precise policy suggestions were needed to promote green economic development. [ABSTRACT FROM AUTHOR]

We investigate how both traditional bank credit and shadow banking credit affect housing prices and financial stress based on China's monthly data from January 2003 to December 2019. Our results show that: (a) the effects of bank credit shocks and shadow banking credit shocks on housing prices partly offset each other; (b) increasing bank loans in recessions will increase financial instability, while increasing shadow bank credit in recessions will lower financial instability; (c) commercial bank credit plays a more important role in explaining housing price fluctuations, while shadow banking credit plays a more important role in explaining financial stress fluctuations. Our results are robust to a wide battery of checks and have important policy implications. [ABSTRACT FROM AUTHOR]

Purpose: This study aims to examine the impact of economic policy uncertainty and bank competition on the financial stability of the Chinese banking industry. This study answers two fundamental questions. First, does economic policy uncertainty (EPU) affects the financial stability of banks in China? Second, does competition affect the financial stability of the Chinese banking sector? Design/methodology/approach: The sample includes all commercial banks to provide a full picture of the Chinese banking sector. This study covers the time between 2011 and 2019. The sample period captures different EPU spikes and key policy changes. This study used different econometric methodologies such as the generalized method of moments and the fixed effect and ordinary least square estimation models. Furthermore, this study used the Instrumental Variable model to solve endogeneity, autocorrelation and unobserved heterogeneity concerns. Besides, alternative EPU and financial stability measures were used. Moreover, this study reestimates the model after dropping the big five state-owned banks. Findings: This study found that both EPU and competition reduce financial stability. This implies that EPU has a negative impact on financial stability. This shows that uncertainty distorts resource allocation efficiency and creates confusion, leading to financial instability in the banking sector. Besides, this study found that competition negatively affects financial stability. This result implies that high competition pushes banks toward riskier activities that ultimately lead to increased financial instability. Originality/value: This study is the first of its kind that examines the impact of EPU and competition on the financial stability of the Chinese banking sector. This study conducted several robustness tests such as the instrumental variable model, alternative measurement and sample construction methods. This study brings policy implications and lessons for the banking sector. [ABSTRACT FROM AUTHOR]

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Using three waves of the China Household Finance Survey (CHFS), we present basic facts about indebtedness and financial fragility of households in China between 2011 and 2015. We show how the total debt and mortgage debt (LTV) are distributed among different income groups, and how they change over time. Our stress tests suggest that Chinese households in higher quintiles, despite the huge increase in household indebtedness, are not vulnerable to declining incomes or falling house prices, while the low‐income households face high vulnerability and struggle to meet their debt commitments. However, the participation rate of low‐income households in the debt market is low, and household debt is mainly held by wealthier and higher‐income households. Our results suggest that the systematic default risk of Chinese household debt is moderate. [ABSTRACT FROM AUTHOR]

The development of financial technology has made financial sub-markets increasingly interconnected, and this interdependence magnifies the instability of financial markets and the possibility of risk. The literature documents the relation of financial sub-markets from time domain, but empirical evidence that effectively identify the patterns of co-movement of multiple financial sub-markets from frequency domain is lacking. This study assesses the dynamic relationship among interest rates, stock prices and exchange rates in China from January 2006 to December 2021 using the Wavelet model. Furthermore, we introduce the TVP-VAR-SV model to study whether the dynamic relationship has changed structurally under the impact of COVID-19. We find the following: 1) with the deepening of the financial market and the improvement of the informatization level, the frequency of risk transmission among financial sub-markets decreases, and the linkage relationship changes from frequent linkage in the medium term to relatively stable linkage relationship in the long term; 2) the relationship between the three variables in short-term fluctuations is more complex, while the relationship between financial variables in long-term fluctuations is more stable; 3) after the outbreak of COVID-19, the positive impact of interest rates and stock prices has brought about a larger range of changes in exchange rate volatility, with a longer impact period and a stronger linkage. [ABSTRACT FROM AUTHOR]

This article investigates the response of monetary policy to financial instability in China. We estimate a forward-looking Taylor rule model with a constructed comprehensive financial stress index using the time-varying coefficient method. Empirical results suggest that financial stability has always been a main concern for China's monetary authorities even in periods with low financial pressure. Moreover, China's central bank tends to lower the policy interest rate in response to financial instability, but the size of policy responses varies substantially over time. Although the proportion of policy interest rate change due to financial stability concern is less relative to developed countries, financial stability is increasing in importance for monetary policymaking in China. We also find that banking stress and stock-market stress are two main concerns for China's central bank, while little evidence supports that exchange-market stress can drive the reaction of China's central bank. [ABSTRACT FROM AUTHOR]

China's shadow banking has been rising rapidly in the last decade, mainly driven by regulations for banks, the Fiscal Stimulus Plan in 2008 and credit constraints in restrictive industries. This sector has continued growing although the regulators repeatedly attempted to impose new regulations on banks and nonbanks. The existence of shadow banking fulfills the high demand for funding. The standard view is that it poses risks to financial stability. However, in China, this is not necessarily the case. Entrusted loans, implicit guarantees from nonbanks, banks or government may provide a second‐best arrangement in funding risky projects and improving welfare. [ABSTRACT FROM AUTHOR]

In crisis times a stable financial system is the basis to stimulate economic growth. In the bank-centered Chinese financial system mainly banks provide additional capital to the economy. According to the International Monetary Fund, the Chinese banking system represents one of the key weak spots of global financial stability. Do Chinese banks mitigate the negative consequences of the Covid-19 crisis or do they increase the risks? Based on the strengths and weaknesses of the Chinese banking system, I discuss the relevance of China for global economic growth. In summary, Chinese banks secure China's short-term growth and lead the global economy back on the growth track. In the long run, the stability of the financial system depends on China's ability to shape a sustainable financial system based on even more extensive reforms. [ABSTRACT FROM AUTHOR]

Taking China's provincial panel data from 2010 to 2020 as an example, this paper verifies that climate change, especially extreme climate change, can destabilize China's financial stability and explores the transmission path of climate risks with meteorological disaster losses as the channel variable. Our empirical results demonstrate that: (a) only after the extreme climate change breaks through a certain threshold, thus causing a significant impact on the financial system; (b) we cannot ignore the improvement of disaster prevention and reduction ability brought by the improvement of social and economic development level; (c) the impact of extreme climate change will spread to the financial system through the economic losses caused by meteorological disasters; (d) there is obvious regional heterogeneity in the spread of meteorological disaster losses to the financial system. Our results are robust to a wider battery of checks and have important policy implications. • This paper empirically tests the impact of climate change on financial stability. • Extreme climate change will damage China's financial stability. • The economic losses caused by climate disasters will spread to the finance. • The transmission of such losses has obvious regional heterogeneity. • This paper provides policy implication for coping with climate risks. [ABSTRACT FROM AUTHOR]

Financial technology (fintech) is rapidly transforming the economy as well as the financial landscape in China. This paper attempts to shed light on its contributing factors, current state, economic impacts and potential risks. We identify three key drivers for China's fintech development, namely shortage of supply in formal financial market, strong government support for promoting financial inclusion through digital technology, and more 'tolerant' regulatory environment. The greatest value of the Chinese fintech sector is promotion of financial inclusion, enabling a vast number of small- and medium-sized enterprises (SMEs) and low-income households to access to financial services. Existing studies unveil some strong evidences of fintech development improving efficiency, increasing employment and supporting entrepreneurship. In the meantime, there are also serious challenges facing this sector, such as regulatory uncertainties, illegal transactions, data abuse, etc. We conclude the paper by presenting some key takeaways, including several lessons for financial regulation. [ABSTRACT FROM AUTHOR]

This study examines whether banking transparency and competition affect financial stability of banks and transparency acts as a conduit in effecting the competition among banks to increase or decrease their financial stability. This study uses multiple variations of a two-step system generalized method of moments approach on annual data from 164 Chinese commercial banks from 2000 to 2014. The results of this study showed that transparency with market power lessens the insolvency risk of banks as well as credit market risk; one could infer that market discipline works more robustly in the presence of disclosure requirements. This study supports existing market literature that China's banking transparency is a significant determinant of changes in financial stability given the market structure of its banking system while controlling for several exogenous and endogenous variables. The results are robust by using alternate proxies for market structure, banking transparency and financial stability. [ABSTRACT FROM AUTHOR]

Financial stability plays an important role in the economic and social development of any economy. This study selects daily frequency data of 20 indicators from the money market, stock market, bond market and foreign exchange market in China as research foundation. Firstly, construct the Index of China's Financial Stability (ICFS) by Dynamic Weighting Method based on the time-varying correlation coefficient, and divide ICFS into three categorical variables (high medium low) by Markov Regime Switching Model, results demonstrate that high risk regime can fully explain the financial risk events occurred in the same period in the history. Secondly, the basic indicators and the categorical variables are put into XGBoost model, it turns out that XGBoost model outperforms other machine learning models in the early warning of financial risk on the performance of various evaluation metrics. Moreover, this study proposed an interpretable framework to give a global and local interpretation of early warning model. It turns out that the risk factors influencing China's financial stability are mainly from real economy, financial institutions, market expectations and real estate market, and we identified the 8 most important features and their early warning values. The results provide significant information to policymakers, market regulators and investors, about employing the early warning values as a useful tool to improve resilience to financial risk. [ABSTRACT FROM AUTHOR]

Environment-related innovations are widely appreciated as a vital factor in achieving sustainable development goals, and stability in the financial sector can help boost the output of environmental innovations by removing financial constraints. Hence, the primary aim of the analysis is to investigate the impact of financial stability on environmental innovation in China by using the QARDL model over the period 1995Q1-2020Q4. The study's main findings confirm the positive role of financial stability on environmental innovation in both the short and long run. Wald test also confirms the asymmetric impact of financial stability on environmental innovation in the short and long run. Moreover, the long-run impacts of GDP, R&D activities, and environmental policy stringency on environmental innovation are positive. In the short run, the estimates of research and development and environmental policy stringency are positively significant at higher quantiles only. Based on the findings, our research will help policymakers to develop valuable policies for financial stability to enhance environmental innovation. [ABSTRACT FROM AUTHOR]

The 2008 US subprime mortgage crisis demonstrated how developments in real estate markets can cause instability in the banking sector and raised concerns in many emerging economies with significant real estate development and a rapidly growing commercial banking sector, particularly in China. There is clear evidence that commercial banks in China, especially regional commercial banks, have lent significantly to the real estate sector. The recent slowdown in the housing market in China and the increase in nonperforming loans (NPLs) in China's commercial banking sector motivated us to investigate the connection between real estate markets and banking stability. This paper proposes three testable hypotheses linking the growth of investment in real estate and the stability of regional commercial banks in China, measured by NPLs. Our empirical results reveal a close connection between the growth of investment in real estate and the NPLs among regional commercial banks, and its sensitivity to real estate market cycles. When real estate market activity declines, our results suggest, regional commercial banks can find themselves in trouble if they have significant exposure to one type of (real estate) asset. In addition, we find that regional bank competition plays a critical role in defining the relationship between bank stability and real estate investment activity. [ABSTRACT FROM AUTHOR]

Household borrowing in China has increased considerably in recent years, raising concerns about the household sector's vulnerability and implications for the stability of the financial system. We construct a number of granular debt-burden indicators at the level of individual Chinese households and calculate the share of households that are financially vulnerable using the three available waves (2011, 2013 and 2015) of China's Household Finance Survey. Overall loan-to-value (LTV) ratios appear safe and sound at first glance, but closer scrutiny reveals that Chinese households in the lowest income quintile face high vulnerability and struggle to meet their debt commitments. Our stress tests suggest that Chinese households in higher quintiles, despite the huge increase in household indebtedness, are not particularly vulnerable to declining incomes or falling house prices. [ABSTRACT FROM AUTHOR]

Should China continue to open its financial system? Our answer to this question is positive since financial opening is necessary for supporting economic innovation, containing financial risks and participating in international economic governance. However, the needs some new ideas in devising next-stage financial opening policies including replacing the experimental approach by more systemic method and top-level design, combining ‘using reform to assist opening’ and ‘promoting reform through opening’, and taking into full account of the spillover effects of Chinese financial policies. Finally, we make policy recommendations in seven key areas, including enforcing better policy coordination, devising macro-prudential regulations, increasing exchange rate flexibility, opening the domestic financial markets, relaxing restrictions on businesses of foreign financial institutions, improving external financing cooperation and adopting prudent cross-border capital flow management. [ABSTRACT FROM AUTHOR]

International economic conditions are projected to have a favorable path in 2018. Thus, accelerating investment in infrastructure and real estate in China, as well as expectations of fiscal loosening in the United States, lead to an increased expectation for enhancement of global trade flows and to strengthen investor confidence. Instead, Britain's decision to leave the European Union, as well as political uncertainty in some euro-zone countries, may cause temporary distortions but also implications for economies in the european region. On the other hand, the divergence of the Federal Reserve and the European Central Bank's monetary policies, as the US expects further increases in interest rates, can be reflected in the activity of the government bond market as a result of the reorientation of investors to assets with higher yield, a trend amplified by the context of the economic environment with low interest rates. Recent developments in the field of financial technology innovation are an important challenge for conventional financial market (payment and settlement) infrastructures, especially in the context of multiple public and private initiatives and projects developed over the last few years. The digitization of financial services is an international concern due to the complexity of this phenomenon, and the lack of harmonized regulations and / or standards in the field. On the one hand, technological innovation in the field of payment systems has the potential to create a number of social benefits by improving access to financial services (financial inclusion). On the other hand, the integration of new technologies in the financial and banking field may imply additional information security risks, especially on payment and settlement systems. Financial technology innovation projects have also been developed by central banks in Europe, but also in America and Asia (for example in the UK, the Netherlands, Sweden, Canada, China and India). They target digital coin concepts, use in distributed real-time payment systems of blockchain technologology, artificial intelligence, and information security. However, a large number of economists admit that the current crisis has emphasized the overcoming of the limits of (mainstream economics) and its implications in the field of financial regulation and the sphere of monetary policy that should focus not only on price stability, but also on financial stability. In other words, the banks, the financial institutions must be obliged to hold a minimal countercyclical capital and mandatory reserves that should be large enough to cope with the turmoil generated by the decrease of the asset prices and the liquidity risk. In macroprudential policy, the "shadow banking system" (investment banks, hedge funds, private equity funds) must also be included. Last but not least, the central banks have to cooperate with the other categories of systemic risk managers: Financial Stability Oversight Council-FSOC (USA), European Systemic Risk Board-ESRB (EU), Financial Policy Committee-FPC (Great Britain), National Committee for Financial Stability-CNSF (Romania). [ABSTRACT FROM AUTHOR]

Researchers neglected the relevance of combining tourism with stakeholders' engagement and financial stability for unlocking the economic constraints. For this, current research intended to study the interplay of tourism recovery options under economic constraints with the role of stakeholders' engagement and financial stability. According to our data, China outperforms the other OECD members. The results shown that Russia comes in second with a consistent in tourism recovery, financial stability, and stakeholders' engagement; Indonesia and Turkey, which finished fourth and fifth in the rankings, have good tourism recovery prospects. Mexico and Brazil come in second and third, respectively, with the worst performance and the lowest scores recorded in the survey findings. The overall interplay among the variables was empirically produced based on the findings of this study and is a new inclusive assessment of financial stability and tourism recovery parameters. It is a useful tool for policy development and evaluation. This study also addresses the criticism of load selection at random and accurately depicts the entire scope of fiscal intervention in the economy to prudently enhance tourism recovery at large., (© 2023. The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature.)

In this paper we investigate the interdependence of the sovereign default risk and banking system fragility in two major emerging markets, China and Russia, using credit default swaps as a proxy for default risk. Both countries’ banking industries have strong ties with their governments and public sector, even after a series of significant reforms in the last two decades. Our analysis is built on the case studies of each country’s two biggest banks. We employ a bivariate vector autoregressive (VAR) and vector error correction (VECM) framework to analyse the short- and long-run dynamics of the chosen CDS prices. We use Granger causality to describe the direction of the discovered dynamics. We find evidence of a stable long-run relationship between sovereign and bank CDS spreads in the chosen time period. The more stable relationship is found in cases where the biggest state-owned universal banks in emerging markets are closely managed by the government. But the fragility of those banks does not directly affect the state of public finances. However, in cases where state-owned banks directly participate in large governmental projects, banking fragility may result in the deterioration of state funds, while raising the risk of sovereign default. [ABSTRACT FROM AUTHOR]

Deposit guarantee insurance has been a very debated topic both in the USA and in Europe. Deposit guarantee insurance is considered to be a highly important mechanism to prevent bank runs and to restore depositor confidence, which is why both in the USA and in Europe during the financial crisis measures were taken to increase the coverage amounts. Interestingly, China is also considering the introduction of a deposit guarantee system. China has indeed known many cases of bank failures recently. Until approximately 20 years ago, this may not have been a big problem in China for the simple reason that all banks were state owned and an implicit guarantee system was provided via the state. However, with privatization of financial markets also occurring in China, bank runs and resulting bank failures have also begun to occur in this country. Attempts have been taken to introduce a deposit guarantee scheme, but they were put on hold because of the financial crisis. This article looks at the particular situation of China, not only addressing some of the instances of bank failures but also studying the particular design problems that may arise in the Chinese context, in the light of experiences in the USA and Europe. Indeed, from the US and European experience, it is well known that, on the one hand, deposit insurance may have many beneficial aspects (preventing bank runs), but, on the other hand, it may also create problems of its own (in particular, creating a moral hazard on the side of financial institutions and neglect on the side of depositors). The article examines how these problems may play out in China and also argues that given the fact that the big five Chinese banks are still state owned introducing risk dependent contributions (which is now advocated in the USA and Europe) may not be appropriate in China. [ABSTRACT FROM AUTHOR]

A complete financial stability analysis should include investigation on macroeconomic stability since macroeconomic development and potential imbalance can increase the financial instability and trigger a financial crisis. Survey data of rating on China's macroeconomic stability is analyzed by estimating an ordered logit model with random effect. Among the candidate macroeconomic indicators, we found that inflation is the key variable that determines China's macroeconomic stability, followed by the change in budget balance and GDP growth gap. [ABSTRACT FROM PUBLISHER]

The real estate cycle and financial stability are closely correlated. In light of global real estate bubbles, China's real estate cycle has attracted wide attention since 1998. The present paper analyzes three driving factors in the context of the current real estate cycle; namely, economic growth, macroeconomic environment and institutional establishment. Supported by econometric analysis using quarterly data from 1992–2004, the present paper indicates that real estate will develop steadily and that housing prices will consistently rise in the relative long run. Based on quantitative analysis, it is concluded that the implications of the current real estate cycle for financial stability include risks of real estate credit exposure, government guarantees and maturity mismatch. Some corresponding policy implications are discussed, such as advancing banking reform, encouraging the rational behavior of local governments and strengthening the regulation of foreign capital flows in and out of China's real estate industry. (Edited by Xinyu Fan) [ABSTRACT FROM AUTHOR]

Wang, L. and Jiang, J.J., 2020. An empirical study on the impact of coastal areas on China's financial stability. In: Qiu, Y.; Zhu, H., and Fang, X. (eds.), Current Advancements in Marine and Coastal Research for Technological and Sociological Applications. Journal of Coastal Research, Special Issue No. 107, pp. 393-397. Coconut Creek (Florida), ISSN 0749-0208. With the improvement of China's openness, the free flow of international capital is more and more free, but at the same time, it also puts forward higher requirements for the stability of the financial system. Coastal areas have the highest degree of openness in China, with more developed economy and finance. It can be said that coastal areas are "systemically important" areas that determine the degree of financial stability in China. This paper first puts forward the hypothesis of "systematic importance" of coastal areas to China's financial stability, then constructs the model of "interest rate total amount of credit", and studies the influence degree of interest rate changes on the total amount of credit in China's major provinces by using the method of time series analysis, and then draws the conclusion that coastal areas are the "systemically important" areas of China's financial stability. Finally, this paper points out that coastal areas are the "systemically important" areas of China's financial stability Suggestions: first, coastal areas should establish corresponding financial stability assessment system while improving financial openness; second, build an effective risk early warning system; third, build an effective risk supervision system; fourth, build an effective emergency system. [ABSTRACT FROM AUTHOR]

The relationship between financial stability and the real estate market has received increasing attention. Understanding the interaction between them may monitor financial risk and real estate price fluctuation. This paper aims at examining the cross-correlation between financial stability and real estate price fluctuation in China. A measure of financial stability is constructed and the cross-correlation between financial stability and the real estate market is demonstrated by using detrended cross-correlation analysis (DCCA). Furthermore, multifractal asymmetric detrended cross-correlation analysis (MF-ADCCA) is used to evaluate the scaling properties of the cross-correlation among financial stability and real estate price fluctuation. Empirical results indicate that asymmetries exist in the cross-correlation and that the asymmetric cross-correlation is multifractal. The cross-correlation is related to the fluctuation magnitude if the financial stress index (or the growth rate in house prices) is in a different trend. Finally, DCCA analysis based on time-delay is employed to investigate transmission direction of the cross-correlation. Our findings indicate the transmission direction is bidirectional, but the impact of financial stability on real estate price fluctuation is larger than the impact in the reverse direction. • A measure of financial stability of China is constructed. • The cross-correlation between financial stability and the real estate market is studied. • Asymmetric multifractal cross-correlation is studied. • Transmission direction of the cross-correlation is further discussed. [ABSTRACT FROM AUTHOR]

The world has entered the digital economy era. As a developing country, China's banking industry plays an important role in the financial industry, and its size ranks first in the world. Therefore, it is of great significance to study the systemic risks of China's banks in the digital economy era. We first compare the traditional indicator approach and the market-based approach theoretically, and Conditional Value at Risk (CoVaR) model, a market-based approach, is considered to be an efficient way to discover systemic risk in different perspectives. Based on static and dynamic models, we evaluate the contributions of sixteen China's listed banks to the systemic risk. Furthermore, we model bank exposures, extend the models by considering extreme circumstance, and incorporate the effects of Fintech and non-bank financial institutions. The results show the levels of systemic risks and the corresponding systemic importance rankings vary in different time periods. We find that the contributions of some small banks to systemic risk are even higher than some big banks during the sample period. Moreover, the big banks face less risks than most of the small banks when the banking system is in distress. We make suggestions for improving financial supervision and maintaining financial stability. [ABSTRACT FROM AUTHOR]

To distinguish systematic and idiosyncratic contagion during financial crises has attracted increasing attention because it can shed light on the potential drivers of contagion. However, the existing methods for distinguishing the two types of contagion cannot work with a large number of institutions. Therefore, this paper innovatively proposes a network-based framework which is able to distinguish the two types of contagion among numerous institutions. By applying the framework to the publicly listed Chinese financial institutions, we've figured out the main drivers of contagion during three financial crises, beneficial for understanding financial stability in China better. • To distinguish systematic and idiosyncratic contagion has attracted much attention. • The extant methods for the distinction cannot work with numerous financial firms. • A network-based framework is proposed to distinguish the two types of contagion. • The proposed framework can work with numerous financial firms. • The drivers of contagion among Chinese financial firms differ during three crises. [ABSTRACT FROM AUTHOR]

China is a bank-dominated country; therefore, the sustainability of the Chinese banking industry is important for economic development. In this paper, data envelopment analysis (DEA) was combined with the Malmquist index, and we statically and dynamically analyzed the efficiency of listed banks during the period 2012–2017. The results showed that 12 of the 17 banks improved their technical efficiency. The technical efficiency of three banks remained the same, whilst that of two banks had dropped slightly by less than 1.0%. The Chinese government has learned from the lessons of past financial crises to find a way to forestall financial crisis, and implemented macroprudential policy, therefore the banking industry has actively served the real economy and promoted economic development while paying attention to the prevention of financial risks. According to the report of The Banker in 2018, for the first time, the four biggest banks in China topped the list of the Top 1000 World Banks. The research showed that, the Chinese government applied macroprudential framework in the banking supervision, and the listed banks effectively resisted financial risks and realized steady growth. We believe that the macroprudential framework plays a positive role in the economic development and financial stability in China. [ABSTRACT FROM AUTHOR]