Browsing by Projects - Department "Department of Economics and Finance"

This study is the first to focus on the establishment and verification of a system of indicators of the competitiveness of young people in Hong Kong. It provides recommendations for the formulation of suitable public policies and the enhancement of youth competitiveness in Hong Kong.

As shown in Demographia (2017), Hong Kong homes are the least affordable in the world for the 8th straight years. To tackle the problem of unaffordability and build up a housing ladder, the government explicitly stated in the Policy Address its attention to take a series of measures, such as increasing land supply, implementing extraordinary stamp duties and offering a 'Starter Homes' programme. Nevertheless, critics have argued that the government lacks a comprehensive view of the housing market and hence that the policies are implemented in a piecemeal manner.

Moreover, while a body of literature has studied the lower end of the housing market (e.g., public housing and sub-divided housing), investigations of higher-end housing are relatively rare. Therefore, our project will complete the full picture of the property ladder by investigating block trade transactions in the Hong Kong housing market. This will help the government to design appropriate housing policies that balance the living needs of low-, middle- and high-income groups.

The proposed study will be important in several ways. First, it will suggest a new housing investment strategy. Traditional housing investment involves 'buy and hold' strategy, but 'short selling' is impossible. Our project will suggest that block trading creates extra returns for investors. Second, the project will study this unique market by computing the block trade premium. By using transaction-level data, it will mitigate the problem of aggregation bias, and hence provide a clearer picture of the housing market. Third, it will investigate the developers' strategies related to housing supply. Because the number of wealthy families is increasing, developers are targeting the high-end market in their recent residential projects by selling 'block trade units'. The 'block trade units' usually incorporate better designs and are limited in supply. Thus, by carefully tracking house trading activities in Hong Kong, our understanding of its high-end housing will be enhanced.

Based on a transaction-level dataset compiled by the investigators, this project will attempt to shed light on three important research questions: (1) Is the occurrence of block trade transactions related to the attributes of real estate developments, including the location and the developers' construction strategies? (2) Are block trade transactions profitable? (3) Are block trade activities related to the dynamics of the macro-economy? The research will be useful for formulating comprehensive housing policies and will be suitable to teach in econometrics and wealth management courses.

The Chinese Government launched its Belt and Road Initiative (BRI) in 2013, with the aim of fostering economic integration among countries along the two main Belt and Road (BR) routes: the land-based Silk Road Economic Belt and the ocean-going Maritime Silk Road. The professed goal of economic integration is to develop an integrated productive and competitive region to promote trade and development and the economic prosperity of the countries along the BR, strengthen regional economic cooperation and achieve mutual learning between different civilisations. The development of transportation infrastructure can augment connectivity along the BR routes and facilitate cross-border trade and investment flows linking cities in China to Europe and Africa via Asia, the Middle East, the Balkans, and the Caucasus. In designing the BR development plan, one important precondition for success is a high level of goods and labour market integration among the BR countries. Validation of purchasing power parity (PPP) requires a high degree of trade integration and the existence of a well-integrated goods market in the economies under examination. If there are PPP relationships among the BR countries, tradable goods will flow freely among them, resulting in the integration of the goods market. Similarly, validation of factor price equalisation or wage convergence indicates free labour mobility and labour market integration. Hence, free trade and free labour mobility encourage convergence in product and labour markets. As such, when the BR countries fulfil the preconditions for closer economic integration, the BRI may call for a platform to form an economic union, and ultimately a monetary union, among China and other BR countries as a long-term policy target. However, economic disparities between the BR countries result from observable and unobservable transaction costs, which are major obstacles to goods and labour market integration within the BR zone. If the product and factor price differentials do not exceed the transaction costs, the arbitrage process that equalises prices across cities will not be activated. The presence of transaction costs thus creates a neutral band within which the relative prices are too small to induce arbitrage so that deviations from long-run PPP equilibrium are non-mean reverting. When the product and factor price differentials exceed the transaction costs outside the band, the mechanisms of product and job switching are activated, with the resulting restoration of mean-reverting long-run equilibrium. This adjustment process is characterised as threshold nonlinearity...

Due to the Covid-19 pandemic, the elimination of brick-and-mortar channels has gained much attention in recent years. Previous studies on retailing and services have mainly focused on channel addition and integration. However, relatively few studies have examined channel elimination and forced adoption of remaining channels. Specifically, the relationship between the distribution of offline touchpoints and the cybersecurity of online channels has not been examined.
In this study, we will conduct scenario-based surveys to understand the influence of channel elimination and addition, especially in the marginal cases of adding the first touchpoint and removing the last touchpoint of offline channels, on people’s perceived control and concern about the cybersecurity of online channels. Highlighting the difference between touchpoints and channels, we define that a channel choice is eliminated when all touchpoints of a channel type are removed. The survey scenarios will be contextualized in the banking sector in Hong Kong. In the first study, we will demonstrate that eliminating all, but not some, brick-and-mortar touchpoints from multichannel, traditional bank will result in a significant reduction of perceived control and a significant increase of concern about cybersecurity. In the second study, we aim to find that by adding merely one single brick-and-mortar touchpoint to a digital-only virtual bank can significantly increase people’s perceived control of the bank’s online channels. The touchpoint addition will also significantly reduce people’s concern about the cybersecurity of its online channels.
Regarding theoretical implications, this study will establish relationships between offline touchpoints and online cybersecurity. It will also address the current research gap of overlooking the gradual process toward complete channel elimination. In terms of practical implications, we recommend that multichannel businesses avoid closing all offline channel touchpoints. Negative effects of perceived control due to the deprived freedom of channel choice are substantial when the size of the brick-and-mortal channel is reduced to none. If a multichannel business decides not to keep even one brick-and-mortar store, we will recommend the business be prepared to upgrade its cybersecurity of online channels.
Furthermore, for digital-only businesses, we will propose an additional approach to alleviate cybersecurity challenges alongside efforts on online channels: adding a brick-and-mortar touchpoint which leaves customers an extra channel choice to complete their customer journey. Customers may be less hesitant to make their online purchases due to the existence of an offline touchpoint.

In September 2023, President Xi Jinping of the People's Republic of China advocated for the development of “New Quality Productive Forces” (NQPF), a novel economic model centered on innovation in advanced sectors. He urged China to “lead the development of strategic emerging industries and future industries.” There are several key elements associated with NQPF:
Sectoral Focus: NQPF addresses the group development of specific sectors.
Supply-Side Emphasis: NQPF prioritizes supply-side dynamics.
Green Development Consideration: NQPF incorporates concerns regarding carbon emissions and other undesirable by-products.
As a relatively new concept, literature on the measurement and study of NQPF is limited. To our knowledge, no existing tools adequately address this topic. We propose that the framework of structural efficiency, within the context of productivity and efficiency analysis, is well-suited for examining NQPF. Structural efficiency measures the overall productive efficiency of a group with varying production units (PUs). However, current structural efficiency models have notable shortcomings, particularly in their neglect of undesirable outputs.
This proposed project aims to bridge this research gap by establishing a green structural efficiency framework that integrates the three aforementioned key elements to evaluate the achievement of NQPF in China's regional economies and listed firms. We will develop a comprehensive model of green structural efficiency to assess the productive efficiency of a group of PUs, taking undesirable outputs into account.
Several objectives in measuring green structural efficiency will be explored, including maximizing desirable outputs while holding other variables constant, minimizing undesirable outputs while holding other variables constant, or a combination of both. Additionally, the project will investigate the sources of inefficiency through various approaches, determining whether misallocation occurs within or among PUs. Finally, the new green structural efficiency framework will be applied to evaluate the Chinese regional economy and firms listed in China, with implications for NQPF identified.

The grocery industry in Hong Kong has increased its concentration over the last three decades. High concentration may give rise to market power, which in turn causes anti-competitive behaviour and high grocery prices that lower the standard of living among consumers, especially those in low-income households. However, based on the theory of contestable markets, high concentration may not necessarily result in excessive market power. On the contrary, its positive impact can allow the dominating few large supermarket chains to take advantage of the economy of scale and transfer the efficiency gains to benefit the community.

If there is fit and proper competition in the grocery industry, the positive benefits should out-weigh the negative costs to the consumers. To assess the degree of competition in the grocery industry, the common approach in the competition policy literature is to first define the relevant market, which identifies all substitutes that are competing in the market. Fewer substitutes reflect a lack of competition where sub-optimal productive and allocative efficiency would likely occur as a result. Competition authorities in foreign countries have recognised the usefulness of econometric cointegration tests in defining the relevant market and have used the test results to support policy and court decisions.

However, the cointegration tests previously adopted by the anti-competition research studies do not consider transaction costs. The existence of these transaction costs are however important because if the potential gain from price differentials of similar products does not outweigh the transaction costs, the arbitrage process to equalise the two product prices will not take place. Hence, when transaction costs are ignored in the estimation, though these two similar products are competing fiercely in a fit and proper competitive market and their prices synchronise closely, the testing results may still mistakenly conclude that these two products are not competitive substitutes.

This research project overcomes this weakness of the previous studies by embedding the transaction costs into nonlinear price-based cointegration tests that specifies different types of regime-switching and adjustment processes. We adopt these econometric methods to examine the price dynamics in the grocery industry in Hong Kong. If possible, we also apply the same methodology to some other economies of interest.

According to the latest statistics released by the Labour and Welfare Bureau, the construction industry records the highest accident rates in Hong Kong. Amongst the nine fatal industrial accidents in 2018, eight came from the construction industry. As many accidents are caused by a lack of safety awareness, it is vital to consider some viable approach to improve that. Likewise, while the development of artificial intelligence is in full throttle, the construction industry is falling behind the curve. Thus, we aim to study the factors that affect the safety awareness and the application of artificial intelligence to enhance it.