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The purpose of this paper is to use samples from Chinese-listed companies to investigate the effects of interest rate deregulation and earnings transparency on company’s capital structure in China over the period of 2003–2015. In particular, the authors study the link between state-owned enterprises (SOEs), economic growth targets and marketization in China’s unique institutional context.

Based on the methodology of quantitative analysis, the authors use baseline and cluster analysis for all samples with full set of controls, for robustness tests of alternative proxy of interest rate control by using a cluster analysis at the firm level, regarding endogeneity tests conducted fixed effect model with adding instrument variables (IV), two-period factors regression method via IV and system generalized method of moments for dynamic analysis.

The results show that earnings transparency increases firm leverage and the additional tests suggest that such an effect takes place via a mechanism by reducing the cost of debt finance. However, information transparency could moderate the effects of interest rate deregulation on corporate capital structure. In addition, it finds that SOEs are less sensitive toward the changes of interest rates in China because lending to SOEs is policy-oriented and lacks of market evaluation of business risk. Government control is conducive to enhancing the transparency of the whole industry; however, market-oriented reform is conducive to enhancing the transparency of the company’s own information.

The paper makes contribution to the relationship between earnings disclosure quality and capital structure in the Chinese unique institutional context, such as taking the progressive interest rate reform, SOES, different economic growth target and different marketization level in each province of China. The authors suggest that investors will pay more attention to the company’s own unique information transparency in the provinces with a high degree of marketization. As a potential direction for future research, the authors will investigate how the earnings transparency has impact on capital structure, and how such impact would depend on the transparency of specific business, the cap of foreign shareholding and the convenience of investment.

This research would be the target of banking market reform in order to bring a fair financing environment for all businesses in China. It implies that current experiment of interest rate liberalization in China is not as efficient as it could be in allocating funds across all businesses. State banks, SOEs and local governments are still the biggest players on both the demand and supply sides of the Chinese credit markets.

The social implication of this paper lies in the fact that first, it provides additional evidence on the effect of market-oriented reforms through how the information transparency interacts with the financial decisions making of corporations. Second, it offers policy implication to banking market deregulation in China.

The paper makes contribution to the relationship between earnings disclosure quality and capital structure in the Chinese unique institutional context. This research tests the existing literature, such as Francis et al. (2004) and Zhang and Lu (2007), and suggests that informationally transparent firms have a higher debt ratio and lower effective interest costs on bank loans. In addition, this paper further explores the role played by interest rate deregulation in corporate finance, and in turn market fund allocation. This paper sheds new light on information transparency and explores the relationship between earnings disclosure quality and debt financing behaviors of Chinese publicly listed companies over the period of 2003–2015.

A full Edgeworth cycle of deposit rate is divided into two phases: an “overcutting cycle” in which the banks battle for deposits, and a “relenting cycle” in which the banks cease battling and instead choose to restore a temporarily low deposit rate. Such strategies have two testable implications on overall market movements. First, deposit rate decreases are more likely to be initiated when the deposit rate is near the upper bound of a cycle. Second, deposit rate decreases are more sensitive than increases to market interest rate changes. This chapter empirically confirms this pattern and shows strong evidence for the presence of Edgeworth cycles in deposit rates after Hong Kong’s interest rate deregulation.

Norway is a small nation state on the northernmost coastline of Western Europe, integrated in the Western world economy. For centuries Norway's integration in the world economy had been based on exports of raw materials such as fish and timber, as well as shipping services. In the early 20th century, furnace-based metals (made possible by cheap hydropower) were added to this export basket. Just as the world economy entered an increasingly unstable phase in 1970s, another natural resource was discovered in Norway: petroleum – that is, oil and natural gas from the North Sea. This chapter analyses the challenges and possibilities inherent in the Norwegian strategy of developing an oil economy in a world economic situation influenced by new and stronger forms of international integration through the four decades between 1970 and 2010.

Nations are currently facing two big movements: globalization of the market and need for increasing competitiveness. Liberalization and deregulation in international trade, finance and investment have drastically reduced global transaction costs and advanced the integration of global markets. But they have simultaneously restricted a range of domestic economic policy options. Despite so, national competitiveness has to be continuously cultivated, so that a nation can fully make use of comparative advantages in the global market. Then, strongly embedded in socio‐economic conditions, national competitiveness requires highly efficient and effective systems of production that match both domestic socio‐economic and global market conditions. Globalization of the market and developing national competitiveness are basically contradictory: globalization compels the development of mechanisms to generate allocative‐efficiency, while national competitiveness requires the development of systems that strengthen national capability and optimize X‐efficiency embedded in socio‐economic conditions. Coping with the two contradictory trends requires the open and flexible adaptation of existing systems to global market conditions, resulting in path dependent globalization. Recent financial deregulation in Japan is a good example, that shows a painful process of path dependent globalization, maintaining national competitiveness while openly and flexibly transferring socio‐economic conditions to suit to new global conditions.

This paper aims to examine the impact of interest rate liberalization on economic growth and the relevance of corruption in the five selected sub-Saharan African countries.

The study used the modified version of Driscoll and Kraay’s model by Hoechle, which solved the effects of cross-sectional dependence and heteroscedasticity.

The findings reveal a positive impact of the index on economic growth, and it was found that foreign direct investment (FDI) and credit to private sector by banks (CPSB) all stimulate economic growth. The interaction terms of corruption with FDI and CPSB indicate negative effects that show how corruption erodes the benefits of liberalization. Finally, the paper recommends the pursuit of appropriate policies with the sole aim of eradicating corruption and providing a conducive environment for business.

The paper developed a composite domestic financial liberalization index to capture the timing and essential dimensions of the reform process. The study investigates the effect of interest rate liberalization on economic growth and the relevance of corruption. Most of the recent and past studies only examined the impact of interest rate reforms on growth without investigating the relevance of corruption.

This paper aims to examine the impact of interest rate liberalisation on the constancy of mean interest rates in China to test the effect of financial reforms and provide strategies for future practices.

Bai and Perron’s (1998, 2003) methodology is used to test for structural breaks in the mean of different interest rates using Chinese data, and break dates are measured against the exact dates of the interest rate liberalisation. The performance of mean interest rates across the regimes defined by liberalisation dates is also investigated.

The main results show that interest rates generally increase (decrease) after deregulations on lending (deposit) rates, but these changes are not significant to induce a negative impact on the domestic economy. Instead, the infrequent but important shifts (structural breaks) in mean interest rates are caused by factors other than liberalisation such as economic shocks, inflationary expectation and liquidity crunch in China.

To the best of the author’s knowledge, this paper provides unprecedented evidence on significant changes in interest rates attributable to the liberalisation within the Chinese context.

This study aims to examine the effect of domestic financial deregulation on economic growth in five selected sub-Saharan African nation (SSA). The paper also explored the interaction effect of domestic financial deregulation and corruption on growth.

The paper used Driscoll and Kraay standard errors based on the pooled ordinary least squares, which is robust to heteroskedasticity, cross-sectional dependence and autocorrelation.

The outcome indicates that domestic financial liberalization has accelerated growth in SSA economies. Similarly, evidence reveals that foreign direct investment and credit to the private sector by banks accelerate growth. However, evidence indicates that labour and capital negate growth. Also, the interaction term for domestic financial liberalization and corruption shows a negative influence on growth. The study, therefore, recommends that well-tailored policy design and strategy be implemented to provide a smooth and conducive business environment for investors.

Numerous studies have analysed the influence of financial deregulation on growth; however, none have examined the effects of domestic financial deregulation on growth in the context of SSA. Also, no studies have explored the interaction effect of domestic financial deregulation and corruption on growth.

This study aims to identify factors influencing the bank failure rate in the USA over the period from 1970 to 2014 with an emphasis on economic/financial factors on the one hand and on banking legislation on the other hand. Regarding the latter, this study empirically investigates four major banking statutes: the Community Reinvestment Act of 1977; the Depository Institutions Deregulation and Monetary Control Act of 1980; the Federal Deposit Insurance Corporation Improvement Act of 1991; and the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. After adopting the technique of generalized method of moments (GMM), a robustness check in the form of autoregressive conditional heteroskedasticity (ARCH) is undertaken. Overall, the estimations imply that the bank failure rate was a decreasing function of the percentage growth rate of real gross domestic product (GDP) and the real interest rate yields on both three-month US Treasury bills and 30-year fixed-rate mortgages and an increasing function of the real cost of funds. In addition, there is strong evidence that the bank failure rate was increased by provisions in the Community Reinvestment Act of 1977 and the Depository Institutions Deregulation and Monetary Control Act of 1980, whereas the bank failure rate was decreased as a result of provisions in the Federal Deposit Insurance Corporation Improvement Act of 1991 and the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. Finally, there also is evidence that higher federal budget deficits elevated the bank failure rate.

After modeling the bank failure rate as a function of financial/economic variables and banking legislation, the times series from 1970 to 2014 is estimated by GMM and then by the ARCH techniques.

The results of the GMM and ARCH estimations imply that the bank failure rate in the US was a decreasing function of the percentage growth rate of real GDP as well as the real interest rate yields on both three-month US Treasury bills and 30-year fixed-rate mortgages and an increasing function of the real cost of funds. Furthermore, there is strong empirical support indicating that the bank failure rate was elevated by various provisions in the Community Reinvestment Act of 1977 and in the Depository Institutions Deregulation and Monetary Control Act of 1980, while the bank failure rate was reduced by certain provisions in the Federal Deposit Insurance Corporation Improvement Act of 1991 and the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. There also is evidence that higher federal budget deficits increased the bank failure rate.

This study is the most contemporary (1970-2014) analysis of potential causes of the bank failure rate in the USA. The study also may be the first to apply the GMM and GARCH models to the problem. Also, some interesting policy implications are provided in the Conclusion.

This paper re-examines the relationship between interest rate changes and bank stock returns using the Japanese experience. Specifically, we test the relationship under two different regulatory regimes. During the first regime (1975–1983), there was strict regulation of the financial system and significant oversight of bank activities, whereas the latter regime (1984–1994) represented a period of financial liberalization and interest rate deregulation. The results presented here indicate that interest rate changes negatively affected Japanese bank equity in the post-regulatory period, but not during the period of heavy regulation. Additionally, we also find that most of the short-term rate effects were channeled through volatility proxies while long-term effects were channeled through yield spread and shape effects. These findings represent new and important insights into the relationship between interest rate changes and bank stock returns.

The purpose of this paper is to examine the trends of cost efficiency (CE) of Indian banks in response to financial deregulation programme launched in early 1990s. More specifically, the findings of this paper offer empirical testing of the basic underlined hypothesis that the CE of banks will rise in the more liberal and competitive environment.

The study employs input-oriented data envelopment analysis (DEA) models that incorporate the quasi-fixed inputs to compute the cost, technical, and allocative efficiency scores for individual banks. The unbalanced panel data spanning from the financial year 1992-1993 to 2007-2008 are used for obtaining efficiency measures. In addition, the panel data Tobit model has been applied to investigate the bank-specific factors explaining variations in the CE.

The empirical findings pertaining to the trends of efficiency measures suggest that: first, deregulation programme has had a positive impact on the CE of Indian banks, and the observed increase in CE is entirely due to improvements in technical efficiency (TE); second, the ranking of ownership groups provides that public sector banks are more cost efficient along with the foreign than private banks; and third, there is a strong presence of global advantage hypothesis in the Indian banking industry. The results of post-DEA analysis reveal that size and exposure to off-balance sheet activities are the key determinants of CE. The results also support the existence of bad luck or bad management hypothesis in Indian banking industry.

The practical implication of the research findings is that the financial deregulation programme seems to be successful in achieving the CE gains in the Indian banking industry. This explicitly signals that the cautious approach of banking reforms adopted by Indian policy makers has started bearing fruit in terms of the creation of an efficient banking system, which is immune to any sort of financial crisis, and resilient to both internal and external shocks.

The present study offers new evidence on the time-series properties of cost, allocative, and TEs of Indian banks. The DEA models used in this study explicitly incorporate the equity as a quasi-fixed input, which accounts for “risk” in the bank efficiency measurement.