Professor Yuming Gui, the Dean of the School of Finance at Zhongnan University of Economics and Law (as the first author), along with co-authors Jianfeng An (School of Finance, Zhongnan University of Economics and Law), Xinrui Zheng (School of Finance, Zhongnan University of Economics and Law), and Jinyang Li (School of Economics, Shenyang University of Technology), published a paper titled Construction of a Nationwide Unified Large Market and High-Quality Financial Development: A Study Based on Breaking the Segmentation of the Bond Market in the third issue of the 40th volume of Management World in 2024.

Abstract: The Chinese bond market is mainly composed of the interbank bond market and the exchange bond market. Until August 2019, most banks were only allowed to invest in the interbank bond market. This changed with the reform allowing banks to enter the exchange bond market. This paper takes the bank entry reform in the exchange bond market as a policy shock to investigate whether breaking the segmentation of the bond market can enhance capital market efficiency and promote financial development. The research findings indicate that bank entry significantly reduces the credit spread of exchange bonds in the secondary market. Mechanism analysis suggests that bank entry improves the liquidity of exchange bonds, reduces information asymmetry, and thereby lowers the credit spread. Furthermore, bank entry also decreases the primary market credit spread of exchange bonds, reducing the cost of bond financing. Heterogeneity analysis reveals that in the secondary market, the credit spread of private enterprise bonds and small and medium-sized enterprise bonds decreases more significantly. In the primary market, bonds with good performance and high credit ratings experience a more pronounced decrease in credit spread. Economic consequence tests show that bank entry promotes corporate investment. This paper extends the relevant research on the construction of a nationwide unified large market and the influencing factors of bond credit spreads. It also provides theoretical support and policy reference for further building a nationwide unified large market, increasing the proportion of direct financing, and promoting high-quality financial development.

Keywords: Nationwide Unified Large Market, Financial Development, Capital Market Reform, Bond Market Segmentation, Credit Spread

Author Biography

Yuming Gui is the Dean of the School of Finance, a Professor, and a Ph.D. Supervisor at Zhongnan University of Economics and Law. He also serves as the Co-Director of the Innovative Introduction of Leading Talents in Digital Technology and Modern Finance Discipline. Gui has been selected as part of the Ministry of Education's New Century Excellent Talents Support Program. He has led several projects funded by the National Natural Science Foundation of China.

Gui's scholarly contributions are evident in over 70 published papers in prestigious journals such as Economic Research, Management World, Quarterly Journal of Economics, World Economy, China Industrial Economics, Financial Research, Economic Modelling, and Pacific-Basin Finance Journal. Many of his papers have been ranked among the top-cited papers. Additionally, Gui serves as an editor for journals like Accounting and Finance.

Jianfeng An is a Ph.D. candidate at the School of Finance, Zhongnan University of Economics and Law.

Xinrui Zheng is an Associate Professor at the School of Finance, Zhongnan University of Economics and Law. She graduated from Trinity College, University of Cambridge in the United Kingdom. She has led a National Natural Science Foundation of China (NSFC) Youth Project and participated in a key project of the National Social Science Foundation. Zheng has been awarded the Outstanding Paper Prize by the Southern Finance Association (SFA) in the United States and has served as a reviewer for the Annual Meeting of the Financial Management Association (FMA). Her working papers have been interviewed by BoardIQ, a supplement of the Financial Times (FT), and cited by Institutional Money magazine in Germany.

Jinyang Li is a full-time faculty member in the Department of Finance at the School of Economics, Shenyang University of Technology. He holds a Ph.D. in Finance from the School of Finance at Zhongnan University of Economics and Law.