Announcements 

The Institute is pleased to announce the funding results of IEMS Research Grants 2018. 6 grants were awarded for unique research conducted on a broad range of emerging market related issues.

We are also pleased to welcome 6 new Faculty Associates effective 1 June 2018: Melody Chao (Management), Yanzhen Chen (Information Systems, Business Statistics and Operations Management), Kai Li (Finance), Wooyoung Lim (Economics), Yatang Lin (Economics), Kim-Pong Tam (Social Science).

IEMS Research Grants

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.

The Savings Puzzle: Experimental Evidence from Migrant Domestic Workers in Hong Kong

Sujata Visaria, Associate Professor, Department of Economics / Wooyoung Lim, Associate Professor, Department of Economics

This  research  will  provide  experimental  evidence  for  the  savings  puzzle  in  emerging  economies:  the  phenomenon  where  individuals  forego  cheaper  dissaving  in  favour  of  more  expensive  borrowing.  Through  detailed  surveys  and  an  artefactual  experiment  with  Filipino  migrant  domestic  workers  in  Hong  Kong,  the  project  will  both  examine  whether  the  puzzle  truly  exists,  and  its  determinants.  Specifically,  it  will  shed  light  on  the  relative  importance  of  financial  illiteracy,  problems  of  self-control,  and  kin  taxes.  It  will  also  examine  whether  market  institutions  can  help  resolve  the  savings  puzzle.  In  particular,  might  high-interest  savings  products  help  individuals  overcome  their  behavioural  constraints  to  saving  and  asset  accumulation?  Research  findings  will  inform both  policy-makers  and  practitioners  working  to  help  the  poor  in  emerging  economies  escape  poverty. [More]

Understanding Dispute Resolution Practices in Emerging Economies: A Cross-Nation Comparison

Melody Chao, Associate Professor, Department of Management / Kim-Pong Tam, Associate Professor, Division of Social Science

The  One-belt,  One-road  initiative  aspires  to  promote  economic  cooperation  and  market  integration  by  connecting  Asian,  European,  and  African  countries. It brings parties  with  potentially  conflicting  positions,  interests,  and  priorities  together. Conflict  is  not  uncommon  in  interpersonal  and  business  exchanges.  Depending  on  how  it  is  managed,  conflict  can  become  constructive  or  destructive.  There  are  cross  cultural  differences  in  conflict  management  practices;  however,  existing  studies  tend  to  focus  on  East  Asian  (mainly  Chinese  and  Japanese)  and  Western  (mainly  American)  cultures.  No  known  research  has  examined  conflict  management  practices  in  most  Belt  and  Road  regions.  Given  the  increasing  interconnectedness  among  these  countries,  understanding  how  conflict  is  managed  and  unveiling  cross  cultural  similarities  and  differences  in  conflict  management  practices  is  imperative.  The  current  study  aims  to  address  this  issue through  conducting  large  scale  survey  studies  in  these  unexplored  regions  in  the  literature. [More]

Estimating the External Costs of Straw Burning in China

Guojun He, Assistant Professor, Division of Social Science, Environment and Economics

The  proposed  research  estimates  the  external  costs  of  straw  burning  in  China.  We  will  investigate  how  farmers’  burning  of  agricultural  residues  affects  local  air  pollution,  people’s  physical  and  mental  health  as  well  as  defensive  expenditures.  We  will  construct  a  novel  dataset  that  links  satellite-detected  straw  burning  to  ground-level  air  quality,  mortality,  mental  health,  online  search  and  sales  at  the  county  level  between  2013  and  2015.  By  applying  a  set  of  fixed-effects  and  instrumental  variable  regression  models,  we  can  credibly  estimate  the  impacts  of  straw  burning  (and  air  pollution)  and  quantify  the  external  costs  of  straw  burning.  We  will  further  explore  the  heterogeneous  effects  of  straw  burning  for  different  sub  populations.  Notably,  following  the  expansion  of  coverage  of  China’s  environmental  monitoring  and  disease  surveillance  networks  in  2013,  we  will  be  able  to  provide  the  first  estimates  of  air  pollution  effects  separately  for  rural  residents  and  urban  residents. [More]

Secondary Schooling and Malleability of Manufacturing Workers in China: A Pilot Study

Yi-min Lin, Professor, Division of Social Science

This  study  develops  and  empirically  tests  the  hypothesis  that  greater  exposure  to  pre-college  education  produces  more  “malleable” factory  workers  in  China’s  manufacturing  sector.  The  working  notion  of  malleability  is  defined  as  comparatively  weaker  tendencies  to  use  “exit”,  “voice”  and  shirking  strategies in  the  workplace.  Ethnographic  research  and  preliminary  survey  data  analysis  reveals a possible link  between  such  tendencies and  the  length  of  schooling  under  China’s  secondary  education system.  Further  analysis  of  survey  data  will  investigate  the  hypothesized  causal  relationship,  with  hometown  availability  of  senior  high vocational school as  IV.  Field  experiments  will  be  piloted  to  ascertain the  causal  channel  by  examining subjects’  schooling,  workplace  conduct, and  behavioral  traits  including  obedience  to  authority,  rule  compliance,  boredom  tolerance,  concentration,  and  self-discipline.  Results  will  shed new  light  on  China’s robust  manufacturing  boom,  FDI,  and the  role  of  schooling in  emerging  economies.  They  will  also  lay  the  ground  for  a  more  comprehensive  GRF  project. [More]

The Turn of the Month Effect of China's Repo Market: Evidence, Causes and Policy Implications

Kai Li, Assistant Professor, Department of Finance

Interest  rate  liberalization  is  a  key  element  of  China’s  financial  sector  reform.  As  one  of the  largest  and  most  liquid  money  market  instruments  in  China,  the  repurchase  agreement  (repo)  market  provides  the  best  information  about  the  market-driven  short-term interest  rates.  In  this  study,  we  document  a  salient  turn  of  the  month  effect  of  China exchange-traded  overnight  repo  rates,  that  is,  temporary  but  significant  increases  in  both the  level  and  volatility  of  the  overnight  repo  rates  at  the  end  of  each  month.  We  plan to  further  provide  empirical  evidence  to  attribute  such  an  effect  to  the  month-end  institution  liquidity  needs.  We  also  emphasize  a  better  understanding  of  this  effect  contains important  policy  implications  on  central  bank’s  liquidity  management  and  on  measures toward  an  efficiently  functioning  money  market. [More]

Ride on Bikes, Rise of Economics

Yanzhen Chen, Assistant Professor, Department of Information Systems, Business Statistics and Operations Management / Yatang Lin, Assistant Professor, Department of Economics and Social Science

We  assess  the  impact  of  bike-sharing  on  residential  house  prices,  rental  rates,  and  public  transportation  usage.  Using  a  comprehensive  dataset  on  a  leading  home  estate  agent  in  China,  we  regress  zip code  level  house  prices  and  rental  rates  on  the  usage  of  sharing  bikes,  instrumenting  bike  usage  with  geographical    ruggedness  in  a  difference-in-difference  setting.  We  expect  to  find  that  in  a  range  of  3  kilometers  from  subway  stations,  the  residential  houses  and  rental  rates  increases  in  general.  Moreover,  we  will  examine  whether  bike-sharing  increased  the  usage  of  public  transportation  including  bus  and  subway  using  a  unique  transportation  transaction  data.  Our  paper  empirically  investigated  the  social  benefit  of  an  on-demand  transportation  solution  for  emerging  economies,  in  which  the  demand  of  transportation  overwhelms  the  development  of  infrastructure  and  environmental  protection  is  urgent  due  to  the  fast  industrialization. [More]