Conference Agenda

Credit rating agencies play an important role in the pricing of bonds. In China, there 3 types of credit rating agencies, namely state-owned, local privately owned, and foreign privately owned. There have been concerns about the creditability of state-owned credit rating agencies when rating bonds issues by the government. The concern arises from the potential agency problem where the credit rating agency and bond issuing parties are both government-owned. However, whether the market actually discounts the rating by government owned credit rating agency is an empirical question. This study presents evidence from the risk premium of Chinese urban investment bonds (CIBs) issued between 2018 and 2021. The empirical results from a dataset of over 15,000 issuances suggests state-owned credit rating agencies does not lead to a higher risk premium for CIBs, indicating that investors do not view the nature of ownership of credit rating agencies as a critical factor in their investment decision-making process.

Incidentally, this study also finds that state-owned underwriter can reduce the risk premium of CIBs compared to underwriters with other ownership attributes. This finding suggests that state-owned underwriters provide a greater level of security to CIB investors, which translates into a lower risk premium for CIB issuances. Furthermore, the study also shows that the inclusion of investor-friendly features, such as cross-protection, pre-commitment, pre-restraint, and put options, can reduce the risk premium of CIBs. However, the inclusion of issuer-friendly features, such as bond redemption options, can increase the risk premium of CIBs. All in all, this study contributes to our understanding of the factors that affect the pricing of government issued bonds in China.

Housing price fluctuation is an important source of economic risk. Exploring the impact of digital inclusive finance on housing price can provide enlightenment for the current two-tier housing price risk reduction. Based on the analysis of the logic of the impact of digital financial inclusion on housing prices, combined with the panel data of 277 cities from 2011 to 2020, using the double fixed effect regression model, instrumental variable model, differential model, threshold regression model and spatial econometric model, Systematically analyze and strictly test the effect, mechanism, threshold characteristics and spatial spillover characteristics of digital inclusive finance on housing prices, and discuss heterogeneity. The results show that: (1) Digital inclusive finance has a significant positive impact on housing prices, and the development of digital inclusive finance can provide support for the stability of housing prices. This conclusion is still valid after the robustness test of historical data as instrumental variables; (2) Digital inclusive finance stabilizes the real estate market and increases housing prices by increasing population inflow, increasing resident income, improving public services, expanding real estate investment and other ways; (3) Digital inclusion finance has a significant threshold effect on housing prices, and the positive impact of digital inclusion finance on housing prices is non-linear. (4) Digital inclusive finance has a spatial spillover effect on housing prices. The development of digital inclusive finance has a certain inhibitory effect on housing prices in surrounding cities when it increases housing prices in local cities. (5) The impact of digital inclusive finance on housing prices is heterogeneous, which can increase housing prices in small cities to alleviate housing price risks, but does not strengthen housing price bubbles in big cities. Overall, the development of digital inclusive finance is conducive to easing the risk of two-tier housing prices, and it is suggested to take active measures to promote digital inclusive finance.

his paper explores the spillover effects of HPR policy on local debt risks. As the urban lands are owned by local governments and residential property tax is not levied in China per se, public land revenue rather than property tax income is pivotal to China’s local government debt repayment. Employing the Chinese prefecture databases of Chengtou bonds during 2003-2021, this paper finds that the HPR policy significantly curtails down the growth of housing prices and residential land prices. Hence, this paper finds that the yield spreads of Chengtou bonds in the cities with HPR policy are 0.49% higher than that in the cities without HPR policy. It suggests that the HPR policy has a significant spillover effect on local debt risks. Lastly, the policies controlling for local government debt risks help to mitigate local government debt risks, while political uncertainty exacerbates local government debt risks.

Using unique contract-level data from a PropTech rental platform, we investigate the impact of housing market conditions on the duration of rental housing supply. Individual landlords are more likely to reduce the duration of and less likely to renew leasing contracts signed with the PropTech platform when their neighborhoods experience higher housing price growth. The effect is stronger for landlords owning multiple rental homes, units with higher marketability, and neighborhoods experiencing more extreme growth. Our findings are consistent with predictions featuring extrapolative beliefs whereby housing booms improve landlords’ expectations of future resale oppor-tunities, with negative spillovers to rental housing stability.