No abstract

Based on the characteristics of financial exclusion and income gap, this paper attempted to elucidate the fluctuation of China’s consumption rate through the mechanism of financial availability of low-income residents and its influence on household consumption in the reform era. The study showed that improving financial availability affects the consumption rate by increasing investment opportunities for low-income earners who can adjust the portfolio of composition. Meanwhile, this effect is affected by the income gap which plays a “threshold” role in the relationship between financial availability and consumption rate. Therefore, inclusive finance development must be adapted to economic development in order to prevent “too much finance”.

Attempts within the prior studies to determine whether the disparities in national saving rates can be explained by cultural attributes have been largely unsuccessful, essentially as a result of the formidable problems of measurement of culture, data availability and endogeneity. We first extend the prior research using the six measurable cultural dimensions of Hofstede et al. [( 2010 ). Culture and Organizations: Software of the Mind, Intercultural Cooperation and Its Importance for Survival, 3rd Edition. New York: McGraw Hill], along with the largest panel database currently available, containing 84 countries over the period 1981–2012, on culture-related variables and saving rates, to test our hypothesis that cultural factors can influence private saving behavior in an international context. We then focus our study on three main cultural variables in East Asian countries — Confucianism, Long-term Orientation (LTO) and Uncertainty Avoidance (UA) — and find that they all have significant impacts on private saving rates around the world. Our findings also potentially solve the puzzle of why China, Japan and other East Asian countries save so much and so persistently since we find that the high LTO measures within these regions determine their high levels of private savings, whilst their low UA measures explain the persistence of their high saving rates, even during a period of financial crisis.

We examine how the dividend tax cut policy tied to the investment horizon enforced on September 8, 2015, influences stock price stability in China's A‐share market. As the new dividend tax policy waives the tax on cash dividends for investors holding a stock for more than a year, it encourages long‐term investment behavior. From 2013 to 2017, we find that stock turnover, return volatility, and turnover volatility decrease after the policy enforcement, especially for stocks with high dividend yields. This result shows that dividend tax reforms increase investors' stock investment horizons and help stabilize the market. However, our findings demonstrate that stock crash risk increases after policy enforcement. Further analysis shows that earnings management through real activities manipulation for stocks with a higher dividend yield contributes to an increase in stock crash risk. Therefore, one externality of the dividend tax cut policy tied to the investment horizon is that top managers of firms with a higher dividend yield may take advantage of investors' passive longer‐term investment behavior and engage in more earnings management. This result suggests that regulatory agencies should pay attention to top managers' earnings management behavior after enacting policies that encourage long‐term investment.