Zhihong Wang

This study examines whether financial leverage promotes sustainable agricultural productivity by accounting for the trade-off between profitability and default risk. We construct a risk-adjusted total factor productivity (TFP) measure by incorporating default risk as an undesirable output into a slack-based DEA framework (USBM), with risk estimated via contingent claims analysis (CCA). Using panel data on Chinese listed agricultural firms, we find a robust inverted-U relationship between leverage and TFP, indicating an optimal leverage range. Mechanism analysis reveals a dual-channel effect: leverage improves productivity through profitability and reduced financing constraints at low levels but increases default risk and undermines financial sustainability at high levels. Decomposition results show that leverage promotes efficiency catch-up but inhibits frontier technological progress, implying a trade-off between short-term efficiency gains and long-term sustainability. Substantial heterogeneity across subsectors and market structures further suggests that optimal leverage is context-dependent. This study contributes by developing a risk-adjusted productivity framework, identifying the nonlinear effects of leverage on sustainable TFP, and providing micro-level evidence from agriculture in a developing economy. The findings offer implications for capital structure optimization and sustainable agricultural finance.

The Black–Scholes model laid the mathematical foundation for modern option pricing; however, its assumptions—stationary, independent, and Gaussian returns—are frequently violated in real markets, where long-memory volatility and sudden price jumps are well-documented. Two issues remain open: (1) Few option pricing models comprehensively incorporate long-memory and jump features. (2) The equivalence of the hedging, risk-neutral, and actuarial pricing methods, well-established under the standard Black–Scholes framework, has not been examined under jump–diffusion models. To address these gaps, we developed a sub-mixed fractional Brownian motion with Jumps (smfBm-J) model that jointly captures long memory, nonstationary increments, and jumps and derives a closed-form European call option pricing formula under the smfBm-J framework, highlighting the impact of model choice on valuation in incomplete markets.

I. Fiscal expenditure volatility is a potential cost in macroeconomic regulation. Many studies have found that even after introducing institutional variables, the negative impact of fiscal expendit...

Public capital plays a key role in national economic production in developing countries, and it has become the focus of factor reform in China. This paper aims at studying the dynamic characteristics of China’s public capital and the return rate. To this end, this paper inventories the public capital stock from 1978 to 2017; constructs a two-sector model to derive the necessary condition for optimal investment related to the return rate, and empirically tests it; estimates the output shares of the two sectors and calculates the rate of return to capital; and illustrates the dynamic evolution of public capital and the return rate from the time and regional dimensions. The study shows that, first, public capital has grown significantly. The portion of public capital held in the form of state-holding is increasing year by year. However, the proportion of public capital to total capital has decreased from 81% to 35%. Second, the growth of public capital has effectively balanced the gap of capital between regions. Third, the rate of return to capital has been decreasing, with two sectors’ return rates having converged in 1981 and in 2010–2013. This paper measures the stock of public capital and its return rate, which is beneficial for formulating the policy of public capital in economic production and distribution, as well as exploring the path to achieving common prosperity.