The Institute has awarded 7 grants for unique research conducted on a broad range of emerging market related issues.
HKUST IEMS Research Grants support high-quality research that provides valuable insights into the challenges facing businesses and governments in emerging markets. The Institute encouraged collaborative proposals among HKUST faculty and with researchers outside HKUST. Priority is given to collaborative research projects that are oriented around the Institute's focus research themes, as well as proposals that contribute to ongoing Institute’s research initiatives on the topics of Belt and Road and Digital Economy.
Guojun He, Assistant Professor, Division of Social Science, Environment and Economics
The proposed research investigates career incentives in the governance system in a randomized control trial. We partner with a provincial government in China to test how alternative performance evaluation schemes affect the performances of College Graduates Village Officials (CGVOs). Proposed schemes range from the status quo of delegation to local officials with total discretion, to a transparent performance score based on easily observable high signal-to-noise ratio indicators. We also test two intermediate evaluation schemes, a transparent scoring formula including a larger set but of lower signal-to-noise ratio indicators, and giving discretion to the local officials to decide on the weighting scheme but not the components of the performance score. The objective is to understand whether the levels of precision, transparency, and delegation in assigning performance scores improve the power of incentives, and to detect potential trade-offs in performance along non-incentivized dimensions. [More]
Wei-Fen Chen, Post-doctoral Fellow, Institute for Emerging Market Studies
This project aims to examine the consumer behavior in emerging markets through the lens of consumers’ upwardly mobile experiences in the macro-societal economic reform. Using multiple research methods, we collect qualitative data in field trips and in-depth interviews to understand how consumers’ upward mobility trajectory affects their status-signaling and discount-seeking behavior, and conduct behavioral experiments to compare these consumers with others in downward mobility. This project is a departure from dominant social class and consumption studies by addressing consumers’ transitional identities in dynamic economic conditions. The focus on consumers’ social mobility experiences rather than on certain social class background may be especially useful to understand the consumer culture in China, where urban consumers enjoy an upgraded lifestyle while their social class consciousness remains ambiguous due to political discourses and socio-ideological sensibilities. We expect the research findings to illuminate intra-class variations, underlying mechanisms, and the co-constitutive consumer culture shaped by consumers, marketers, booming economies, and the socio-historical transformations in emerging markets. [More]
Li Han, Assistant Professor, Department of Social Science
As in many other countries in emerging markets, trade has been one of the most important engines for China’s growth miracle since the late 1970s. Yet how the export-led growth strategy affects the long-run growth trajetories depends on how it affects human capital formation, which is far from clear. We plan to examine how export expansions of products with different skill levels affect rural residents’ schooling choice by combining data drawn from the National Rural Fixed-point Survey (NRFS) and the product-level export data from the General Administration of Customs of China (GACC). To address the endogeneity issue, we will construct the instrumental variables (IVs) by exploiting exogenous changes in tariffs and exchange rates of export destination countries. Particularly, we differentiate export goods by skill intensity and construct IVs for export expansions of different skill intensity based on the skill intensity of the export products. [More]
The financial sector plays a critical role in affecting the aggregate economy. In the medium and long run, underdevelopment of financial markets can be an important reason for poor performance in economic growth. What is less well understood are the channels through which the financial sector impacts the aggregate economy. Substantial progress in our understanding has been made by studying the financing channel (see, e.g., Holmstrom and Tirole (1997)). However, there are puzzles that cannot be explained by this channel. Our proposed project attempts to explain the effect of financial underdevelopment on economic growth by studying a different channel — the information channel. We propose a theory of information amplification and spillover that explains the propagation effect of the financial sector. Our theory shows that financial underdevelopment results in high information frictions, which cause resource misallocation. [More]
Mingyi Hung, Professor, Department of Accounting / Tai-Yuen Chen, Professor, Department of Accounting
We plan to examine the effect of regulatory arbitrage on the quality of bank financial reporting in a cross-boarding banking setting. Our sample will consists of subsidiary banks in various host countries (owned by their parent banks in home countries). We will example weather that regulations of parent banks’ home countries affect the disclosure concerning loan loss provisions and non-performing loans by their subsidiary banks in foreign countries. We will also consider whether regulations in home countries also increase the likelihood that a banks’ foreign subsidiaries receive qualified audit opinions. In addition, we expect that the effect of home-country regulatory forbearance of subsidiaries’ locating countries. Overall, our study will contribute to the literature by documenting an additional cost of regulatory arbitrage, namely that more restrictive home-country regulations tend to increase a bank’s financial reporting opacity abroad. [More]
Sunny Huang, Associate Professor, Department of Economics / Xiaojian Zhao, Assistant Professor, Department of Economics
Financial fraud is a prevailing issue in developing countries. We study how investors are exploited by too-high-to-be-true financial products using a model in which a fraction of investors is unaware of the possibility of financial fraud. Unaware investors purchase financial products that are inconsistent with their risk attitudes, and their behaviors, in turn, provide an incentive for firms to conduct financial fraud. Reducing the fraction of unaware investor induces firms to behave honestly, and financial fraud disappears if this fraction drops below a certain threshold. With this insight, we experimentally measure investor’s risk attitude, the level of financial literacy, and the effect of an eye-opening financial education program. We also survey subjects’ demographic characteristics. Compared to assigning the education program randomly, targeted education will be more effective. Using the data from our experiments and surveys, we conduct a counterfactual analysis to quantify this effect. [More]
Amy N. Dalton, Assistant Professor, Department of Marketing / Anirban Mukhopadhyay, Associate Professor, Department of Marketing
People across countries vary significantly in their reported happiness levels. However, experienced happiness can sometimes be inconsistent with signaled happiness, thus making the drivers of signaled happiness an important issue to investigate. We explore when and why people signal happiness, how they signal happiness, and the impact of these signals of happiness on subsequent happiness. We suggest the answers to these questions depend on cultural and societal factors such as the collectivism-individual orientations, materialistic levels, and vertical/horizontal power structure of a country. Research on happiness signaling provides insights on what people mean when they say they are happy. It also provides practical implications for marketers on how happiness is represented in consumers’ minds. In addition, understanding the influence of signal exchanges in the context of signaling happiness sheds lights on the impacts of modern technology on people’s wellbeing. Thus, we propose to investigate signaled happiness more thoroughly, and understand how they vary across emerging markets. [More]
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