Essays on Chinese Financial Market

My dissertations aim at understanding the different aspects of the Chinese financial markets. It includes three chapters. The first chapter studies how firm level political connections affect a firm\u27s decision of going to court and the trial outcomes, using hand-collected data on Chinese listed firms. We found that connected firms have a win rate that is 8.6% higher than unconnected firms have. The higher win rate is most significant in cases with straightforward facts, in provinces where the local legal institutions are weak, and in cases tried in politically-connected firms\u27 home provinces. The empirical evidence is consistent with the hypothesis that the difference in the win rates is caused by judicial bias. We show that trial outcomes have real impacts on firms\u27 stock prices. In the second chapter, I examine the effectiveness and cost of monetary sterilization in China. The study adapts a 2SLS method to estimate the extent of China\u27s sterilization. It also compares the sterilization cost with the central bank\u27s income from investing foreign exchange reserves. I conclude that the sterilization has been highly effective to date. Moreover, so far the sterilization cost of the central bank can be fully covered by the income from foreign reserve investment. The third chapter provides a comprehensive review of China\u27s financial system, and explore directions of future development. First, the financial system has been dominated by a large banking sector. Second, the role of the stock market in allocating resources in the economy has been limited and ineffective. Third, the most successful part of the financial system is a non-standard sector that consists of alternative financing channels, governance mechanisms, and institutions. Finally, among the policies that will help to sustain stable economic growth in China are those that reduce the likelihood of damaging financial crises, including a banking sector crisis, a real estate or stock market crash, and a twin crisis in the currency market and banking sector

China’s Financial System: Opportunities and Challenges

We provide a comprehensive review of China’s financial system, and explore directions of future development. First, the financial system has been dominated by a large banking sector. In recent years banks have made considerable progress in reducing the amount of non-performing loans and improving their efficiency. Second, the role of the stock market in allocating resources in the economy has been limited and ineffective. We discuss issues related to the further development of China’s stock market and other financial markets. Third, the most successful part of the financial system, in terms of supporting the growth of the overall economy, is a non-standard sector that consists of alternative financing channels, governance mechanisms, and institutions. The co-existence of this sector with banks and markets can continue to support the growth of the Hybrid Sector (non-state, non-listed firms). Finally, among the policies that will help to sustain stable economic growth in China are those that reduce the likelihood of damaging financial crises, including a banking sector crisis, a real estate or stock market crash, and a “twin crisis” in the currency market and banking sector.

Abnormal Cell Repsonses and Role of TNF-α in Impaired Diabetic Wound Healing

Impaired diabetic wound healing constitutes a major health problem. The impaired healing is caused by complex factors such as abnormal keratinocyte and fibroblast migration, proliferation, differentiation, and apoptosis, abnormal macrophage polarization, impaired recruitment of mesenchymal stem cells (MSCs) and endothelial progenitor cells (EPCs), and decreased vascularization. Diabetes-enhanced and prolonged expression of TNF-α also contributes to impaired healing. In this paper, we discuss the abnormal cell responses in diabetic wound healing and the contribution of TNF-α

An Alternative View on Law, Institutions, Finance and Growth

The spectacular economic growth in East Asian economies such as China, South Korea and Taiwan over the past five decades contradicts most of the existing research on law, institutions, finance, and growth. We propose an alternative view based on the comparison of legal institutions and alternative institutions outside the legal system. Despite well-known advantages, the legal system, as a monopolist institution, can be captured by interest groups and become a barrier to innovations. Moreover, in a dynamic environment alternative institutions can adapt and change much more quickly than when the law is used, as this process does not require persuading the legislature and the electorate to revise the law. We argue that in fast-growing economies and during early stages of economic growth, efficient alternative institutions are the main driver for finance, commerce and growth. In static environments with low and predictable growth, legal institutions can play a more important role in supporting finance and commerce. In these environments, however, viable alternative institutions and competition among different types of institutions remain keys to ensuring that the most efficient mechanism prevails and sustains long-term growth

FOXO1 Promotes Wound Healing Through the Up-Regulation of TGF-β1 and Prevention of Oxidative Stress

Keratinocyte mobilization is a critical aspect of wound re-epithelialization, but the mechanisms that control its precise regulation remain poorly understood. We set out to test the hypothesis that forkhead box O1 (FOXO1) has a negative effect on healing because of its capacity to inhibit proliferation and promote apoptosis. Contrary to expectations, FOXO1 is required for keratinocyte transition to a wound-healing phenotype that involves increased migration and up-regulation of transforming growth factor β1 (TGF-β1) and its downstream targets, integrin-α3 and -β6 and MMP-3 and -9. Furthermore, we show that FOXO1 functions in keratinocytes to reduce oxidative stress, which is necessary to maintain cell migration and prevent cell death in a TGF-β1–independent manner. Thus, our studies identify a novel function for FOXO1 in coordinating the response of keratinocytes to wounding through up-regulation of TGF-β1 and other factors needed for keratinocyte migration and protection against oxidative stress, which together promote migration and decrease apoptosis

High-throughput cell-based screening reveals a role for ZNF131 as a repressor of ERalpha signaling

<p>Abstract</p> <p>Background</p> <p>Estrogen receptor α (ERα) is a transcription factor whose activity is affected by multiple regulatory cofactors. In an effort to identify the human genes involved in the regulation of ERα, we constructed a high-throughput, cell-based, functional screening platform by linking a response element (ERE) with a reporter gene. This allowed the cellular activity of ERα, in cells cotransfected with the candidate gene, to be quantified in the presence or absence of its cognate ligand E2.</p> <p>Results</p> <p>From a library of 570 human cDNA clones, we identified zinc finger protein 131 (ZNF131) as a repressor of ERα mediated transactivation. ZNF131 is a typical member of the BTB/POZ family of transcription factors, and shows both ubiquitous expression and a high degree of sequence conservation. The luciferase reporter gene assay revealed that ZNF131 inhibits ligand-dependent transactivation by ERα in a dose-dependent manner. Electrophoretic mobility shift assay clearly demonstrated that the interaction between ZNF131 and ERα interrupts or prevents ERα binding to the estrogen response element (ERE). In addition, ZNF131 was able to suppress the expression of pS2, an ERα target gene.</p> <p>Conclusion</p> <p>We suggest that the functional screening platform we constructed can be applied for high-throughput genomic screening candidate ERα-related genes. This in turn may provide new insights into the underlying molecular mechanisms of ERα regulation in mammalian cells.</p

FOXO1 Expression in Keratinocytes Promotes Connective Tissue Healing

Wound healing is complex and highly orchestrated. It is well appreciated that leukocytes, particularly macrophages, are essential for inducing the formation of new connective tissue, which requires the generation of signals that stimulate mesenchymal stem cells (MSC), myofibroblasts and fibroblasts. A key role for keratinocytes in this complex process has yet to be established. To this end, we investigated possible involvement of keratinocytes in connective tissue healing. By lineage-specific deletion of the forkhead box-O 1 (FOXO1) transcription factor, we demonstrate for the first time that keratinocytes regulate proliferation of fibroblasts and MSCs, formation of myofibroblasts and production of collagen matrix in wound healing. This stimulation is mediated by a FOXO1 induced TGFβ1/CTGF axis. The results provide direct evidence that epithelial cells play a key role in stimulating connective tissue healing through a FOXO1-dependent mechanism. Thus, FOXO1 and keratinocytes may be an important therapeutic target where healing is deficient or compromised by a fibrotic outcome

FOXO1 Deletion in Keratinocytes Improves Diabetic Wound Healing through MMP9 Regulation

Keratinocyte migration is a key aspect of re-epithelialization during wound healing. Matric metalloproteinase 9 (MMP9) contributes to this process and deificiencies in the MMP9 lead to impaired healing. Inappropriate expression of MMP9 also contributes to impaired re-epithelialization. Previously we demonstrated that FOXO1 was activated in wound healing but to higher levels in diabetic wounds. To address mechanisms of impaired re-epithelialization we examined MMP0 expression in vivo in full thickness dermal scalp wounds creared in experimental K14.Cre+.Foxo1L/L mice with lineage-specific Cre recombinase deletion of floxed FOXO1 and compared the results to control littermates. MMP9 was induced during wound healing but at a significantly higher level in diabetic compared to normal wounds. FOXO1 deletion substantially blocked this increase. By chromatin immunoprecipitation FOXO1 was shown to bind to the MMP9 promoter, FOXO1 overexpression increased MMP9 transcriptional activity and increased MMP9 expression simulated by high glucose that was blocked by FOXO1 deletion or FOXO1 knockdown. We also show for the first time that high glucose impairs keratinocyte migration by inducing high levels of MMP9 expression in diabetic wound healing, which represents a novel mechanism for impaired re-epithelialization in diabetic wounds