12 March 2026, Volume 0 Issue 3

    

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  The Dynamic Effects and Transmission Channels of Central Bank Communication —A Dual Perspective Based on Policy Signals and Economic Signals

  Zhao Kaiyu, Guo Tianyong

  Studies of International Finance. 2026, 0(3): 3-17.

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  Communication serves as a pivotal tool for central banks in managing expectations, playing an indispensable role in establishing and refining modern central banking systems. Drawing on communication texts issued by the People's Bank of China from 2006 to 2023, this paper conducts an in-depth examination of the dynamic effects and transmission mechanisms of central bank communication from a dual perspective: monetary policy communication and economic situation communication. Through systematic analysis of monetary policy implementation reports, meeting minutes, and official speeches, this study innovatively constructs a localized lexicon tailored to China's policy context. Based on this lexicon, it generates monetary policy communication indices and economic situation communication indices to precisely quantify the orientation and intensity of both types of signals. Building on this foundation, the study employs a TVP-VAR model for empirical testing, systematically revealing the divergent dynamic pathways through which monetary policy communication and economic situation communication influence the real economy, price levels, and international capital flows. It also delves into the multifaceted transmission channels underlying these effects.
  The study finds significant differences in how monetary policy communication and economic situation communication impact the macroeconomy. Firstly, regarding the effects on the real economy, policy signals exhibit policy inertia featuring persistent and cyclically fluctuating effect. In contrast, economic signals show strong short-term but weak long-term effects, with a sustained impact dependent on actual economic support. Secondly, regarding price levels, the impact of policy signals diminishes as the monetary policy framework shifts toward a price-based approach, whereas economic signals primarily exert short-term effects and face fewer constraints from policy transitions. Thirdly, regarding international capital flows, policy signals exhibit inherent contradictions—attracting inflows in the short term but potentially triggering outflows in the long term. Conversely, positive economic signals continue to maintain their sustained appeal. Further analysis of the mechanisms reveals that both signal types transmit effects through credit channels, asset price channels, and economic expectation channels, with credit and expectation channels primarily driving short-term transmission. Additionally, policy signals exert influence via interest rate channels and policy uncertainty channels.
  This study challenges the idea that central bank communication is homogeneous. It shows, through evidence, the different and dynamic macroeconomic effects of a dual-signal structure. It recommends that central banks refine and coordinate expectation management. To do this, a dynamic and collaborative communication framework needs to be established, which must adjust the emphasis, intensity, and methods for releasing both types of signals. Adjustments depend on the stages of the economic cycle and main macroeconomic policy objectives. Communication practices must align with the shift to price-based monetary policy. Explanations of structural policy tools and interest rate corridor mechanisms should be strengthened. Coordination of micro-level information with fiscal and regulatory authorities is also important. This comprehensive approach will improve the rigor, precision, and effectiveness of expectation management and provide strong support for refining the central banking system.
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  How does Financial Uncertainty Inhibit Household Consumption?—From the Perspective of Household Debt Burden and Asset Allocation Adjustment

  Zhan Kai, Zhong Weixia, Wu Zhouheng

  Studies of International Finance. 2026, 0(3): 18-32.

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  This study constructs a comprehensive analytical framework to examine how financial uncertainty inhibits household consumption, focusing on the mediating roles of household debt burden and asset allocation adjustment in the context of Chinese households'“housing-stock dual-core”asset structure and high leverage. Integrating macro-econometric local projection analysis, micro-data from the China Family Panel Studies and, a DSGE model, the research challenges the conventional notion that asset diversification inherently ensures consumption smoothing. It proposes a refined transmission mechanism:“financial uncertainty → asset allocation adjustment → debt-constraint differentiation”.
  The results indicate that rising financial uncertainty not only induces households to shift their portfolios from stocks to housing but also leads to heterogeneous consumption responses critically moderated by household debt levels. Debt-free households can mitigate adverse effects by reallocating assets toward real estate and benefiting from housing appreciation, thereby maintaining relatively stable consumption. In contrast, indebted households experience significantly stronger consumption suppression due to the rigidity of mortgage payments, binding liquidity constraints, and impaired asset adjustment flexibility. The financial accelerator mechanism amplifies these divergent responses, deepening consumption volatility under debt heterogeneity.
  Mechanism analysis further reveals that household debt operates through two key channels: it restricts portfolio reallocation flexibility via binding mortgage constraints, and it heightens households' risk sensitivity. These effects collectively weaken the risk-hedging function of diversified asset holdings, particularly for households with dual asset configurations（housing and financial assets）, rendering them the most vulnerable group under financial uncertainty shocks.
  The study provides a coherent explanation for the shifting macroeconomic patterns observed before and after 2021. During the pre-2021 housing market expansion period, rising financial uncertainty coincided with increased household leverage, housing price growth, and moderately restrained consumption. In the post-2021 period, amid real estate adjustments and elevated debt levels, the same uncertainty triggered simultaneous deleveraging and more pronounced consumption contractions, revealing the breakdown of consumption-smoothing mechanisms under high indebtedness.
  Based on these findings, the study proposes three targeted policy recommendations: Firstly, expand the supply of inclusive and low-risk financial products to diversify household asset portfolios beyond real estate and stocks, enhancing the effectiveness of consumption smoothing. Secondly, implement structural debt management tools, such as flexible repayment schemes during periods of high uncertainty, to alleviate liquidity pressure on indebted households and help restore their consumption capacity. Thirdly, strengthen coordination between monetary and macroprudential policies to stabilize market expectations, mitigate systemic financial volatility, and create a more predictable environment for household consumption planning. These steps are essential for rebuilding household financial resilience, supporting sustainable domestic demand growth and achieving the macroeconomic goals of“stabilizing consumption and expanding domestic demand”.
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  Exchange Rate Regime, Invoicing Currency and Exchange Rate Pass-Through into Import Prices

  Li Xiao, Li Bonan

  Studies of International Finance. 2026, 0(3): 33-48.

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  Studying the determinants of exchange rate pass-through is a prerequisite and key point to determining the extent to which economic variables respond to exchange rate movements. Existing literature has already pointed out the important role of invoicing currency and exchange rate regime in the exchange rate pass-through. This paper focuses on the relationship between and among invoicing currency, exchange rate regime, and exchange rate pass-through from two perspectives: the impact of the exchange rate regime on the level of exchange rate pass-through and on the role of invoicing currencies in the exchange rate pass-through.
  Theoretical framework points out that exporters adjust prices and importers absorb exchange-rate changes differently when the exporting and importing countries choose different exchange-rate regimes, resulting in heterogeneous price responses to exchange rate movements. The exchange rate regime of the exporting country affects the level of exchange rate pass-through by altering firms' price adjustment behavior, while that of the importing country influences the response of product prices to exchange rate changes by changing the domestic economic environment. Moreover, under different exchange rate regimes, price adjustment behavior varies across products invoiced in different currencies and thus changes the role of invoicing currencies in exchange rate pass-through. Therefore, exchange rate regimes not only directly affect the responsiveness of prices to exchange rate movements, but also indirectly alter the level of exchange rate pass-through by modifying the impact of invoicing currencies.
  The empirical analysis consists of two parts. Firstly, this paper analyzes Japan's import data during 2000-2022, revealing that countries or regions with a fixed exchange rate regime exporting to Japan tend to have a lower level of exchange rate pass-through in Japan. Moreover, the role of yen-invoiced prices in exchange rate pass-through has increased, while that of dollar-invoiced prices has decreased. Secondly, based on the empirical results of global import data during 2007-2019, it indicates that countries with a fixed exchange rate regime have higher levels of exchange rate pass-through, while a fixed exchange rate reduces the role of dollar-invoiced prices. Furthermore, this paper performs mechanism tests to examine how exchange rate regimes affect the level of exchange rate pass-through. The results indicate that the exchange rate regime of the exporting country influences exchange rate pass-through via exporters' price adjustment behavior. In addition, when the importing country adopts a fixed exchange rate regime, the negative effect of capital account openness on exchange rate pass-through is mitigated.
  The research in this paper deepens the understanding of the exchange rate pass-through mechanism from a new perspective and provides valuable reference suggestions for policymaking in the changing global economic landscape. For open economies, the exchange rate pass-through mechanism should consider not only the domestic exchange rate regime but also those of trading partners. In an environment of uncertain economic environment, exchange rate regime choice and invoicing currency should be incorporated into a unified policy framework.
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  Fluctuations in Exchange Rate Expectations and Firm Overseas Financing

  Qiu Guojing

  Studies of International Finance. 2026, 0(3): 49-61.

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  In recent years, promoting the high-quality overseas expansion of enterprises and optimizing their global business layouts have become a crucial pathway for enhancing national comprehensive competitiveness, consolidating the foundation of great-power competition, and thereby advancing high-quality development of the real economy. Against this backdrop, deepening two-way opening up in the financial and economic sectors has emerged as a key measure to facilitate the transformation of the real economy toward innovation-driven growth and efficiency improvement. However, as opening-up continues to deepen, the divergence in market expectations not only significantly impacts corporate investment and financing decisions in complex international environments, but also poses potential threats to their orderly operation and healthy development, potentially even triggering systemic risks.
  This paper clarifies the impact of exchange rate expectation fluctuations on corporate overseas financing from two dimensions:“carry trade”and“cost-saving”.Furthermore, it empirically examines this impact using data from Shanghai and Shenzhen A-share listed companies for the period 2007 to 2024. The findings reveal that fluctuations in exchange rate expectations can curb corporate overseas financing by weakening the “carry trade”motivation of firms seeking returns from international interest rate differentials and strengthening the“cost-saving”motivation to avoid exchange losses and financing frictions. The core conclusions remain robust after a series of rigorous tests, including controlling for concurrent policy interference, instrumental variable regressions, quasi-natural experiments, and placebo tests. Cross-sectional analysis indicates that the inhibitory effect of exchange rate expectation fluctuations on corporate overseas financing is more pronounced among firms with currency appreciation expectations, lower operational risks and more investment opportunities.
  To stabilize exchange rate expectations and enhance corporate resilience to risks arising from exchange rate fluctuations, this paper proposes three recommendations. Firstly, in the process of improving the exchange rate formation mechanism, government departments should strive to implement forward-looking, consistent and stable exchange rate policies and pay attention to guiding market expectations. During policy adjustments, the government should carefully control the magnitude and frequency of exchange rate fluctuations to mitigate the adverse impact of exchange rate expectation changes on corporate overseas financing decisions at the source. Secondly, enterprises should optimize their global industrial and supply chain layouts, actively establish systematic and prudent exchange rate risk management systems, integrate internal financial risk management capabilities with external market financing capacities, steadily expand overseas operations in complex exchange rate environments, and enhance overall operational efficiency and comprehensive competitiveness. Thirdly, when formulating and implementing relevant policies, government departments should fully recognize and consider the heterogeneity among enterprises in terms of risk tolerance, information acquisition and processing models, and financing demand structures. In the process of policy design and implementation, a classification, stratification, and phased enterprise response evaluation mechanism should be established.
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  Foreign Patient Capital and Enterprise New Quality Productive Forces: The Significance of Institutional Opening Up

  Bian Yuchen

  Studies of International Finance. 2026, 0(3): 62-74.

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  Developing new quality productive forces can break through the bottlenecks of traditional industries. It is conducive to fostering the emergence of emerging and future industries and, therefore, should be a focus area for achieving the goal of high-quality development. Patient capital, as a new capital form with value-discovery capabilities, plays a crucial role in promoting the development of new quality productive forces. However, constrained by imperfect market institutions, the scale of patient capital in China has grown slowly. International medium- and long-term capital constitutes an important component of patient capital. As such, it can serve as a significant supplement to the development of patient capital in China.Therefore, expanding the introduction of foreign patient capital becomes an important breakthrough for accelerating the development of new quality productive forces. Furthermore, institutional opening-up can promote the alignment of domestic market standards, regulatory systems, and legal frameworks with international markets. Consequently, it may play a significant role in empowering the development of new quality productive forces through foreign patient capital.
  Based on a sample of A-share listed enterprises from 2011 to 2023, this paper empirically examines the impact of foreign patient capital on enterprise new quality productive forces and further verifies the moderating effect of institutional opening-up in this process. The main findings are as follows. Firstly, foreign patient capital can enhance enterprise new quality productive forces. Upon further classification of investors, the result shows that the development of enterprise new quality productive forces is driven primarily by institutional foreign patient capital, whereas the impact of individual foreign patient capital is statistically insignificant. Secondly, foreign patient capital can provide“triple empowerment”for the development of new quality productive forces. Specifically, it functions through three channels—“capital acquisition”,“technology transfer”, and“governance optimization”— thereby enhancing enterprise new quality productive forces. Thirdly, institutional opening-up can strengthen the positive effect of foreign patient capital on enterprise new quality productive forces. Lastly, the effect of foreign patient capital on enterprise new quality productive forces exists only in high-tech enterprises, highly competitive industries, regions with high judicial protection of intellectual property rights, and during periods of strict macro-prudential regulation.
  This paper is one of the earlier studies conducted on foreign patient capital. It innovatively extends the research on patient capital to the field of cross-border capital operation, thereby broadening the research boundaries of this topic. Besides, this paper innovatively proposes the“triple empowerment”theory of foreign patient capital for the development of enterprise new quality productive forces. Therefore, it contributes to the literature on the determinants of enterprise new quality productive forces. Additionally, it provides practical implications for developing new productive forces through foreign investment. Furthermore, this paper enriches the theoretical framework of institutional opening-up. It enhances the understanding of the role that geographical advantages play in the transfer of resources from foreign capital to domestic enterprises. Therefore, it has policy implications for accelerating the establishment of a high-level opening-up pattern.
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  Measurement and Mitigation of Banking System Risks Under Real Estate Credit Shocks—An Analysis Based on an Interbank Network Model

  Zhang Zongxin, Huang Zijian

  Studies of International Finance. 2026, 0(3): 75-90.

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  The real estate sector is a vital component of China's economy, as well as a significant source of financial risk. Since 2021, the downturn of China's real estate cycle has led to the emergence of credit risks associated with real estate sector. Given the substantial scale of real estate loans held by China's banking system, shocks stemming from real estate credit pose a potential threat to banking stability.
  Aiming at clarifying how real estate credit shocks affect banking system risks and their underlying mechanisms, this paper constructs an interbank network model that integrates capital and liquidity perspectives. The model captures direct and indirect bank linkages while incorporating four contagion channels. On this basis, the study conducts numerical simulations to assess the impact of real estate credit shocks on banking system risk and to determine the safety threshold. This paper further decomposes the structure of banking system risk, measures bank-level systemic vulnerability and systemic importance, and evaluates the cross-regional spillover effects of regional real estate risks. Additionally, the study simulates the effect of the policy proposed during the 2025 National People's Congress and the Chinese People's Political Consultative Conference（NPC & CPPCC）regarding the replenishing capital of large state-owned commercial banks.
  The study yields several important findings. Firstly, the impact of real estate credit shocks on the banking system exhibits a dual-phase characteristic of“risk mitigation to risk diffusion”as the shock intensifies. Under minor shocks, the banking system can absorb the effects on capital and liquidity. When the shock exceeds the safety threshold, risks tend to diffuse within the banking system. Currently, China's non-performing loan ratio in real estate sector is within the risk mitigation range and remains far below the safety threshold, indicating that real estate credit shocks will not trigger systemic risks. Dynamically, the reduction in real estate credit scale has limited banks' exposure to real estate risks, significantly enhancing the sector's resilience to shocks. Secondly, the combined effect of interbank network and real estate market network can lead to cross-regional spillovers of regional real estate risks, with nationwide large banks acting as critical nodes. Thirdly, the policy proposed during the 2025 NPC & CPPCC sessions“issuing 500 billion yuan of special treasury bonds to support large state-owned commercial banks in replenishing capital”,which can effectively curb risk contagion, expand the safety threshold against real estate credit shocks, and play a role in mitigating systemic risks.
  Based on the findings, this paper proposes three policy recommendations. Firstly, establish a dynamic intervention mechanism against real estate credit shocks including supporting distressed real estate firms to lower credit default risks, implementing network-based stress tests and bank risk ratings, and employing appropriate regulations to sever risk contagion channels. Secondly, implement differentiated risk prevention measures based on banks' systemic importance and vulnerability, such as capital replenishment for systemically important banks, prudential oversight for vulnerable small and medium-sized banks, and market-based exit for high-risk banks. Thirdly, build a cross-regional risk prevention system based on the“real estate-banking”dual network, with the aims of securing the safety threshold for regional real estate credit risks and preventing the spillover of regional risks into system-wide crises.
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  Research on the Impact of Investment-Loan Linkage Model on Technology-Based Small and Medium-Sized Enterprises—From the Perspective of Total Factor Productivity

  Chen Wenzhe, Shi Ning, Liu Rongyu

  Studies of International Finance. 2026, 0(3): 91-104.

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  In recent years, China has deliberately piloted the“Investment-Loan Linkage”model, aiming to integrate commercial banks'“credit extension”with venture capital institutions'“equity investment”, providing targeted financial support for technology-based small and medium-sized enterprises（SMEs）that are characterized by light assets, high growth potential and high risks. As a crucial financial innovation embedded in the national innovation-driven development strategy, this model has evolved into a significant engine for incubating high-quality SMEs and boosting technological breakthroughs in multiple regions across China.
  This article adopts a text analysis method to construct a scientific measurement indicator for enterprises' adoption of investment-loan linkage financing, overcoming limitations of existing quantitative metrics in previous literatures. Based on the panel data of technology-based SMEs listed on the New Third Board from 2016 to 2023, it empirically tests the impact of investment-loan linkage on the total factor productivity（TFP）of these enterprises, with rigorous robustness checks and endogeneity treatments conducted to ensure the credibility of the findings.
  Research has found that investment-loan linkage significantly improves the total factor productivity of technology-based small and medium-sized enterprises, effectively promoting the high-quality development of enterprises. The mechanism analysis reveals that investment-loan linkage mainly exerts its effect through two channels: firstly, it alleviates financing constraints by leveraging the certification signal of venture capital to reduce information asymmetry between banks and enterprises, while also establishing close cooperative relationships between commercial banks and venture capital institutions to enable information sharing, thereby enhancing banks' risk tolerance and credit supply willingness; secondly, it incentivizes R&D investment both by reshaping banks' risk appetite to enhance their tolerance, achieved through an intertemporal balance of additional equity returns and risk, and by effectively safeguarding the interests and innovation willingness of the founding team.
  Furthermore, the heterogeneous empirical finding indicates that the effect of investment-loan linkage model on improving the total factor productivity of technology-based small and medium-sized enterprises is more significant in“earlier established, small scale”firms and non-state-owned enterprises, highlighting the model's critical role in correcting resource allocation distortions and supporting financially constrained micro-entities.
  This study provides empirical reference for accelerating the promotion of investment-loan linkage policies and has certain reference significance for promoting the high-quality growth of technology-based small and medium-sized enterprises, advancing the development of technology finance and fostering a positive cycle of “technology-industry-finance”.
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  Impact of the New Regulations on Asset Management on Outward Foreign Direct Investment—From the Perspective of Corporate Financialization

  Yin Lijuan, Yan Lina, Li Zhiyuan

  Studies of International Finance. 2026, 0(3): 105-120.

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  In the context of strengthened financial regulation and rising corporate financialization, this study examines the 2018 New Regulations on Asset Management（NRAM）as a policy shock. Designed to mitigate systemic financial risks and redirect capital toward the real economy, the NRAM significantly tightened corporate financing conditions. Concurrently, China's outward foreign direct investment（OFDI）has continued to expand, with evidence suggesting a shift in some investments from traditional productive motives toward models driven by financial asset allocation. However, micro-level causal evidence linking financial regulation, corporate financialization, and OFDI remains scarce. To address this gap, this paper adopts a corporate financialization lens and utilizes a firm-year-country-level OFDI database covering Chinese A-share listed companies from 2013 to 2023. Using the NRAM as an exogenous policy shock, this paper applies an intensity difference-in-differences（DID）model to evaluate its heterogeneous effects on OFDI and the underlying transmission mechanisms. The study aims to inform policy efforts to balance financial risk prevention with the strategic goal of high-level opening-up.
  The main findings are as follows. Firstly, the NRAM significantly reduced OFDI in firms with higher pre-policy financialization, while exerting a limited effect on less financially integrated firms. This suggests that the policy not only constrained certain investments but also helped steer corporate motivations from financial arbitrage toward real-economy objectives. These results are robust to parallel trend tests, placebo tests, PSM-DID, and instrumental variable estimations. Secondly, mechanism analysis indicates that the policy weakened firms' ability to pursue OFDI by tightening financing constraints and reducing financial asset holdings. By restricting shadow banking and non-standard financing channels, the NRAM raised external funding costs, particularly for firms reliant on such avenues. It also lowered the returns on financial assets, limiting firms' ability to fund overseas projects through financial gains. Thirdly, heterogeneity analysis reveals that the negative effects were more pronounced among non-state-owned enterprises, firms with lower operating cash flows, and those with higher information transparency. Finally, the policy's constraining influence was stronger for investments in developing countries, Belt and Road Initiative economies, countries with closer institutional proximity to China, and projects undertaken via greenfield investment modes.
  Based on these findings, the paper proposes several policy recommendations. While maintaining necessary financial oversight, more targeted and differentiated OFDI support measures should be introduced. Policies should prioritize genuine real-economy investment needs and help alleviate financing constraints through dedicated credit facilities and risk-sharing mechanisms. Support should also be tailored according to firm asset structures, investment types, and host-country characteristics, with particular attention to facilitating greenfield investments in Belt and Road and other developing economies. Such an approach would help contain financial risks while preserving adequate space for substantive and productivity-driven OFDI.