NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Working Papers by Joseph Fan

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Working Papers

December 2011Capitalizing China
with Randall Morck, Bernard Yeung: w17687
Despite a vast accumulation of private capital, China is not embracing capitalism. Deceptively familiar capitalist features disguise the profoundly unfamiliar foundations of “market socialism with Chinese characteristics.” The Chinese Communist Party (CCP), by controlling the career advancement of all senior personnel in all regulatory agencies, all state-owned enterprises (SOEs), and virtually all major financial institutions state-owned enterprises (SOEs), and senior Party positions in all but the smallest non-SOE enterprises, retains sole possession of Lenin’s Commanding Heights. This manuscript introduces the chapters comprising the NBER volume Capitalizing China (Fan and Morck, eds. 2012), which examine China’s high savings rate, banking system, financial markets, financial regulation...

Published: Translating Market Socialism with Chinese Characteristics into Sustained Prosperity, Joseph P. H. Fan, Randall Morck, Bernard Yeung. in Capitalizing China, Fan and Morck. 2013

October 2010An International Comparison of Capital Structure and Debt Maturity Choices
with Sheridan Titman, Garry Twite: w16445
This study examines the influence of institutional environment on capital structure and debt maturity choices by examining a cross-section of firms in 39 developed and developing countries. We find that a country’s legal and tax system, the level of corruption and the preferences of capital suppliers explain a significant portion of the variation in leverage and debt maturity ratios. Our evidence indicate that firms in countries that are viewed as more corrupt tend to use less equity and more debt, especially short-term debt, while firms operating within legal systems that provide better protection for financial claimants tend to have capital structures with more equity, and relatively more long-term debt. In addition, the existence of an explicit bankruptcy code and/or deposit insurance ...

Published: Joseph P.H. Fan, Sheridan Titman, and Gary Twite. 2012. An International Comparison of Capital Structure and Debt Maturity Choices. Journal of Financial and Quantitative Analysis 47(1), 23-56.

January 2009Vertical Integration, Institutional Determinants and Impact: Evidence from China
with Jun Huang, Randall Morck, Bernard Yeung: w14650
Where legal systems and market forces enforce contracts inadequately, vertical integration can circumvent these transaction difficulties. But, such environments often also feature highly interventionist government, and even corruption. Vertical integration might then enhance returns to political rent-seeking aimed at securing and extending market power. Thus, where political rent seeking is minimal, vertical integration should add to firm value and economy performance; but where political rent seeking is substantial, firm value might rise as economy performance decays. China offers a suitable background for empirical examination of these issues because her legal and market institutions are generally weak, but nonetheless exhibit substantial province-level variation. Vertical integratio...
September 2007Institutions and Foreign Investment: China versus the World
with Randall Morck, Lixin Colin Xu, Bernard Yeung: w13435
Weak institutions ought to deter foreign direction investment (FDI), and mass media stories highlight China's institutional deficiencies, yet China is now one of the world's largest FDI destinations. This incongruity characterizes China's paradoxical growth. Cross-country regressions show that China's FDI inflow is not exceptionally large, given the quality of its institutions and its economic track record. Institutions clearly determine a country's allure as an FDI destination, but standard measures of institutional quality can be problematic for countries undergoing rapid institutional development, and can usefully be augmented by economic track record measures. Deng Xiaoping's 1993 "southern tour" heralded sweeping reforms, and this regime shift is insufficiently reflected in commonly u...

Published: Fan, Joseph P.H. & Morck, Randall & Xu, Lixin Colin & Yeung, Bernard, 2009. "Institutions and Foreign Direct Investment: China versus the Rest of the World," World Development, Elsevier, vol. 37(4), pages 852-865, April.

Contact and additional information for this authorAll NBER papers and publicationsNBER Working Papers only

 
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