Four papers collected in this symposium section address different issues in the areas of financial history, insurance fraud, international trade, and aggregate saving. They were presented at the 6th Chinese Economic Association (Europe) and 25th Chinese Economic Association (UK) Annual Conference in Gothenburg, Sweden, September 2014. Thanks to the efforts of Professor Jianbo Zhou of Peking University and Professor Ali M. Kutan of Southern Illinois University Edwardsville, the quality of the manuscripts has been largely improved since the Gothenburg conference.
In the paper “Shanxi Merchants’ Multi-Level Financial System in Ming and Qing Dynasty China,” Zhou, Hao, Jin, and Zhou critically discuss the financial institutions established in ancient China from aspects of business models and risk management. The system, on one hand, facilitated capital flows and hence promoted economic growth, while on the other hand, due to its limitations, it eventually gave way to the modern banking system. It is expected that important historical lessons might be derived from the Chinese experience regarding the importance of an efficient financial system in maintaining economic growth and advances in social development.
The paper on the measurement of insurance fraud by Zhou, Wang, Zhou, and Xu, using a relatively large sample of law suits data, provides an empirical investigation on fraud severity in comparison of provincial capital cities with medium and small cities. Influencing factors such as population mobility, moral constraint, and fraud cost were considered in the analysis. The study may have important implications for the practice of the new law that appears to involve excessive protection for the insured.
Wu, Zhou, Li, Liu, and Cai, in the paper on the estimation of Armington substitution elasticity, examine the elasticity for China’s imported commodities. Their findings indicate that imported commodities and domestic products are complementary and there exhibits price transition effect of imported commodities, but it is not significant. These findings lead to the interesting conclusion that the price of domestic product should be the main reason behind the inflation in China’s economy.
Based on a general equilibrium approach, Chen, Kong, Wang, and Hu derive the causal relationship between income inequality and aggregate saving. They assume that the rich have a lower marginal propensity to consume. Thus a fall in income inequality will lower national saving in general. They found strong empirical evidence to support their model using Chinese provincial panel data.
Overall, the wide coverage of the symposium in terms of both subject areas and methodologies employed can be regarded as a reflection of efforts made by scholars stationed mainly in mainland China. It also demonstrates how fruitful it can be when scholars from both inside and outside China cooperate.
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Notes on contributors
Jinghai Zheng
Jinghai Zheng is an Associate Professor, Department of Economics, University of Gothenburg, Sweden, currently working as a Senior Lecturer at Newcastle Business School, Northumbria University, UK.