Date: 19 September 2024 (Thu)
Webinar
Webinar Series:
Capital Marketing Development: China and Asia
Empowering through Courts: Judicial Centralization and Municipal Financing in China
19 September 2024, Thursday
10:00 am – 11:10 am, Thursday (Singapore Time, UTC+8)
[Empowering through Courts: Judicial Centralization and Municipal Financing in China]
This study finds that reducing political influence over local courts weakens local government debt capacity. The authors establish this result by exploiting the staggered roll-out of a judicial centralization reform aimed at alleviating local court capture in China and find reduced judicial favoritism towards local governments post-reform. The majority of local government lawsuits are with contractors over government payment delays. The reform not only increases government lawsuit losses but also exposes their credit risk, as payment delays without court support signal government liquidity constraint. Investors respond by tightening lending and increasing interest rates, which curbs government spending.
Speaker:
Yang SU, Assistant Professor of Finance, Chinese University of Hong Kong
Co-authors:
Jiayin HU, Assistant Professor of Finance, National School of Development, Peking University
Wenwei PENG, Post-Doctoral Fellow, Department of Economics, Harvard University
Discussant:
Jacopo PONTICELLI, Associate Professor of Finance, Northwestern University
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Event Website
https://abfer.org/events/abfer-events/webinar-series/382:webinarseries-cmd-35
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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.