Date: 16 Feb 2023 (Thu)
Webinar

Webinar Series:

Capital Marketing Development: China and Asia

Judicial Independence, Local Protectionism, and

Economic Integration: Evidence from China

16 February 2023, Thursday

10:00 am – 11:10 am, Thursday (Hong Kong Time, UTC+8)

[Judicial Independence, Local Protectionism, and Economic Integration: Evidence from China]

The authors show that judicial independence can reduce local protectionism and foster cross-regional economic integration. The authors exploit a judicial independence reform in China with staggered roll-out since 2014. The reform removed local governments’ control over local courts’ financial and personnel decisions, thereby substantially improving local courts’ independence. Combining novel data on the universes of civil lawsuits and business registration records, the authors show that local defendants’ rate of winning court cases against non-local plaintiffs declined by 7.0% after the reform. The effect is mainly driven by improvements in the quality of judicial decisions and is more salient for politically connected local defendants. Over time, the reduction in local protectionism encouraged smaller non-local firms to file lawsuits against larger local firms. Using the shareholding network extracted from business registration records, the authors find that the decline in local protectionism could attract 8.4% more inward investment flows into reformed localities. This has the potential to increase China’s GDP by 1.9% when the judicial independence reform is implemented nationwide.

Speaker

Shaoda WANG, Assistant Professor, Harris School of Public Policy, University of Chicago

Co-authors:
Ernest LIU, Assistant Professor in Economics, Princeton University

Yi LU, CITIC Chair Professor, School of Economics and Management, Tsinghua University

Wenwei PENG, Ph.D in Social Science, Hong Kong University of Science and Technology 

Discussant:
Emanuele COLONNELLI, Associate Professor of Finance and MV Advisors Faculty Fellow, Booth School of Business, University of Chicago 

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Event Website

https://abfer.org/events/abfer-events/webinar-series/327:webinarseries-cmd-26

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About the Webinar

Financial market development goes hand-in-hand with economic growth. The development of China's capital markets in terms of size, regulations, capability, and efficiency has been impressive. China may now even lead globally in some dimensions, notably e-payments systems. Yet, China's capital markets are still a work-in-progress facing both generic and unique challenges. Other Asian capital markets have even greater uneven development. Some in advanced Asian economies have acquired globally acclaimed reputation and capabilities while various regulatory and structural weaknesses dwarf others. Corporations and investors have been inclined to arbitrage cross-border regulatory and developmental gaps; so the very uneven status of capital markets across Asia is a policy issue for the governments in the entire region and perhaps globally. Analysing the positive and negative lessons in the functioning of Asia's capital markets, and identifying reforms and applications of technology that could further improve Asian capital markets' allocation efficiency, financial inclusion, and forewarning against reforms that might cause problems can benefit practitioners, policymakers and researchers, and can contribute significantly to overall prosperity.

The ABFER and the University of Chicago's Becker Friedman Institute China (BFI-China), in collaboration with National University of Singapore (NUS) Business School, Shanghai Advanced Institute of Finance (SAIF), The Chinese University of Hong Kong (CUHK) Department of Economics, CUHK-Shenzhen and Tsinghua University PBC School of Finance (Tsinghua PBCSF), hope to provide a virtual network to benefit researchers, policymakers, and practitioners from Asia and beyond.