Annual Conference

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Senior Fellows/Fellows, Capital Market Development: China and Asia

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May 2013

Real Estate Collateral Value and Investment: The Case of China

Jing WU, Yongheng DENG, Joseph GYOURKO
Previous research on the United States and Japan finds economically large impacts of changing real estate collateral value on firm investment that amplified the business cycles of those countries. Working with unique data on land values in 35 major Chinese markets and a panel of firms outside the re...
Keywords: Housing and land markets, Collateral Channel, Financial constraints, Firm investment
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Annual Conference

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International Macroeconomics, Money & Banking, Senior Fellows/Fellows

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May 2013

Macroprudential Policy and Zombie Lending in Korea

Takeo HOSHI, Younghoon KIM
During the housing boom in the mid-2000s, Korea used the Loan-to-Value ratio (LTV) regulation and Debt-to-Income ratio (DTI) regulation to limit the expansion of mortgage financing and the rapid rise of housing prices successfully. The limit on mortgage financing, however, made many banks to look fo...
Keywords: Macroprudential Policy, Zombie Lending, Korea
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Annual Conference

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International Macroeconomics, Money & Banking

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May 2013

Manufacturing-Finance Comparative Advantage and Global Imbalances

Rui MAO, Yang YAO
Treating finance as a tradable service, this paper examines how global current account imbalances can emerge as a result of the Ricardian comparative advantage in manufacturing and finance. The financial sector screens borrowers to limit its risk exposure when it provides finance to manufacturing fi...
Keywords: Manufacturing-finance comparative advantage, global imbalances, international division of labor
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Annual Conference

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Capital Market Development: China and Asia

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May 2013

Market Making Contracts, Firm Value, and the IPO Decision

Hendrik BESSEMBINDER, Jia HAO, Kuncheng (K.C.) ZHENG
We examine the effects of secondary market liquidity on firm value and the decision to conduct an Initial Public Offering (IPO). Competitive liquidity provision can lead to market failure as the IPO either does not occur or the IPO price is discounted to reflect that some welfare-enhancing secondary...
Keywords: designated market maker, affirmative obligation, Information asymmetry, Firm Value
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Annual Conference

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Corporate Finance, Senior Fellows/Fellows

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May 2013

Measuring Economic Policy Uncertainty

Steven J. DAVIS, Scott R. BAKER, Nicholas A. BLOOM
We develop a new index of economic policy uncertainty (EPU) based on newspaper coverage frequency. Several types of evidence—including human readings of 12,000 newspaper articles—indicate that our index proxies for movements in policy-related economic uncertainty. Our U.S. index spikes near tigh...
Keywords: economic uncertainty, Policy uncertainty, Business Cycles, fluctuations
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