Blockchain Adoption in China’s ABS Market: Efficiency and Governance Implications by Yanfeng Zhang | Thought Leadership Briefs | Publications | HKUST Institute for Emerging Market Studies

Blockchain Adoption in China’s ABS Market: Efficiency and Governance Implications

HKUST IEMS Thought Leadership Brief No. 86

Yanfeng Zhang

Blockchain technology has experienced significant growth alongside the rise of cryptocurrencies. However, little empirical examination has been conducted to determine if blockchain truly delivers benefits or introduces new risks. Concerns include potential collusion among participants and the exploitation of blockchain's illusory reliability for fraudulent activities.

ABS refers to asset-backed securities, which are securities backed by a pool of assets like loans. We analyze whether blockchain adoption in China’s ABS market improves transaction efficiency and transparency while considering potential weak governance and market efficiency in pricing such complexity. We found that adopting blockchain significantly reduced ABS yield spreads though the benefits varied and were greater for opaque assets regulated by one of the two major China’s regulatory bodies compared to other asset classes and regulators.

About the Author

Yanfeng Zhang is Associate Professor in Dept. of Management at the Hong Kong University of Science and Technology (HKUST) and Faculty Associate of HKUST Institute for Emerging Market Studies. He earned his Ph.D.from University of Wisconsin Madison in 2006, majored in management and minored in economics. His research interests primarily revolve around the nexus of strategic management and entrepreneurship. His work has been published at leading management and entrepreneurship journals such as AMJ, SMJ, JBV, JMS, ICC, and SEJ. He also serves the editorial board of AMJ since 2013, the most prestigious academic journal in the management field and won the Best Reviewer Award in 2014 and 2016. He was the recipient of the Irene M. McCarthy Award for the best paper on the topic of High Technology and Innovation at the Babson International Entrepreneurship Conference. Dr. Zheng has won several major research grants such as General Research Funding (GRF) of Hong Kong. He also has extensive teaching experience in entrepreneurship and strategic management. He has developed a few innovative teaching methods and novel courses such as Fintech Entrepreneurship.

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