American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Internationalizing Like China
American Economic Review
vol. 115,
no. 3, March 2025
(pp. 864–902)
Abstract
We empirically characterize how China is internationalizing its bond market by staggering the entry of different types of foreign investors into its domestic market and propose a dynamic reputation model to explain this strategy. Our framework rationalizes China's strategy as trying to build credibility as a safe issuer while reducing the cost of capital flight. We use our framework to shed light on China's response to episodes of capital outflows.Citation
Clayton, Christopher, Amanda Dos Santos, Matteo Maggiori, and Jesse Schreger. 2025. "Internationalizing Like China." American Economic Review 115 (3): 864–902. DOI: 10.1257/aer.20221722Additional Materials
JEL Classification
- E44 Financial Markets and the Macroeconomy
- F38 International Financial Policy: Financial Transactions Tax; Capital Controls
- G12 Asset Pricing; Trading Volume; Bond Interest Rates
- G15 International Financial Markets
- G23 Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors
- O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- P34 Socialist Institutions and Their Transitions: Financial Economics