Political uncertainty and bond defaults: evidence from the Chinese market

Zou, Jin; Li, Shuxin; Xu, Zihan; Deng, Guoying

doi:10.1080/1351847x.2022.2089048

Cited by 3 publications

(8 citation statements)

References 59 publications

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“…China's bond market still has a low default rate despite bond defaults gradually becoming the norm after the first default in 2014. There will be no more than 0.5% of defaulted bond balances in the Chinese bond market from 2014-2021, much lower than the 1.12%-2.15% in international bond markets [10].…”

Section: Credit Riskmentioning

confidence: 89%

“…The credit risk reflected in bond ratings is one of the characteristics of bonds [10]. The Chinese bond market is currently experiencing some credit rating issues.…”

Section: Credit Riskmentioning

confidence: 99%

“…Additionally, the bond market lacks default data. China has had a long-term 'zero default' phenomenon on its bond market [10]. China's bond market still has a low default rate despite bond defaults gradually becoming the norm after the first default in 2014.…”

Section: Credit Riskmentioning

confidence: 99%

“…China has a state-dominated economic system due to its unique political system. It is easy to observe political connections in China due to the close interaction between local governments and enterprises within their jurisdiction [10]. In China, Local officials in China are appointed top-down and in an opaque manner [10].…”

Section: Political Risksmentioning

confidence: 99%

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China's Bond Market: The Current Situation, Problems, and Countermeasures

Zhou

2023

AEMPS

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It is undeniable that the bond market plays a key role in the social economy as a whole. Economic development and the state of the bond market often reflect the state of the country's financial markets. Bond markets in China have developed rapidly and have a large financing capacity. In recent years, however, the volatility of the bonds in China has gradually increased due to epidemics, policies and funds, etc. The bond market has undergone a drastic adjustment. This paper describes the current bond market situation in China, analyzes the problems, and proposes solutions for the market. The main problems are the credit risks in bond rating and the impact of political risks on bond market. This paper provides advice on credit risk from the perspective of creating a credit environment, improving data quality, and strengthening regulation. This study has a positive impact on China's bond market's development.

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Section: Credit Riskmentioning

confidence: 89%

“…The credit risk reflected in bond ratings is one of the characteristics of bonds [10]. The Chinese bond market is currently experiencing some credit rating issues.…”

Section: Credit Riskmentioning

confidence: 99%

Section: Credit Riskmentioning

confidence: 99%

Section: Political Risksmentioning

confidence: 99%

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China's Bond Market: The Current Situation, Problems, and Countermeasures

Zhou

2023

AEMPS

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“…In China, changes in local Communist Party secretaries increase the risk of stock price collapse in local firms, particularly for non-state-owned companies and those with less transparency [ 25 ]. Political turnover also raises the possibility of bond defaults [ 26 ] and increases the cost of equity financing [ 27 ].…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

The effect of political turnover on corporate ESG performance: Evidence from China

Liu¹,

Hao²,

Song³

2023

PLoS ONE

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This paper aims to investigate the effect of political turnover on corporate ESG performance in China. By analyzing data from Chinese A-share-listed companies between 2010 and 2020, we have discovered that changes in the municipal party committee secretary or the mayor of the prefecture-level city where a firm is located have a detrimental effect on corporate ESG performance. Compared with the change of the party committee, the change of mayor has a more pronounced negative impact on ESG performance. The reason behind this negative effect is primarily attributed to policy uncertainty, which leads to a decrease in governmental subsidies and an increase in ineffective under-investment by companies, consequently resulting in decreased corporate ESG performance. Furthermore, we have also observed that the adverse influence of political turnover on corporate ESG performance is relatively mitigated in SOEs, politically connected firms, and tertiary industries. These findings contribute to a deeper understanding of the relationship between political uncertainty and corporate behavior, particularly in emerging markets.

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Political Uncertainty and Financial Firm Performance: Evidence from the Thai Economy as an Emerging Market in Asia

2023

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This study analyzes the effects that certain political-uncertainty factors have on financial firm performance in the Stock Exchange of Thailand (SET). The results of a panel regression performed on a database of 7976 firm-years over 18-year unbalanced panel data from 2001 to 2018 show a mixed relationship between political uncertainty and firm performance. The constitutional reform harms the return on assets (ROA), and the government election and political protest significantly decreased the market value of equity (MVE). In contrast, constitutional reform increased MVE, and the government election positively impacted ROA. Therefore, this study emphasizes how political unpredictability is assumed to influence firm performance in Thailand’s economy, an Asian developing country.

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Political uncertainty and bond defaults: evidence from the Chinese market

Cited by 3 publications

References 59 publications

China's Bond Market: The Current Situation, Problems, and Countermeasures

China's Bond Market: The Current Situation, Problems, and Countermeasures

The effect of political turnover on corporate ESG performance: Evidence from China

Political Uncertainty and Financial Firm Performance: Evidence from the Thai Economy as an Emerging Market in Asia

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