China Business Knowledge @ CUHK

Critical thinking needs effort and humans have developed habits to simplify the information process for daily comfort called heuristics or mental shortcuts. In personal finance, such practices can lead to biases and losses, but there is a certain shortcut that may be helpful. A new study found that loan applications in China using cognition-conserving heuristics, where borrowers use round numbers for simplicity, are less likely to get funded and more likely to be overdue. However, incorporating the number eight to appeal to lenders’ heuristics, as the word eight in Chinese sounds like wealth, has the opposite effect. “Borrowers who use lucky numbers make more effort to understand the lenders’ preferences and make their loan applications more attractive,” says Michael Zhang, Wei Lun Professor of Business Artificial Intelligence at the Department of Decisions, Operations and Technology at CUHK Business School. These findings highlight how mental shortcuts can shape financial decisions in subtle yet significant ways. As the peer-to-peer lending landscape continues to evolve, understanding these heuristics can help both borrowers and lenders make more informed decisions. Professor Zhang suggests that identifying borrowers’ tendencies to use heuristics would help lending platforms segment their customers into different risk profiles. Read more at https://lnkd.in/gkuzUwS3 #P2Plending #sociallending #luckynumbers #personalfinance

For real estate companies, location is the most critical factor in investment. Tier-1 cities are especially appealing for their status in urban hierarchies, but when it comes to profit, these popular cities may not be the best options. “The location of geographic diversification significantly impacts firm value, and a higher exposure to the developed Chinese cities reduces the benefit of geographic diversification,” says Desmond Tsang, Associate Professor of Real Estate at the School of Hotel and Tourism Management at CUHK Business School. While popular cities may seem like the best bet, they often come with fierce competition and high costs that can eat into profits. Instead, focusing on less developed regions can provide better opportunities for growth. Real estate firms can find valuable gems in up-and-coming areas where progress is on the rise. Read more at https://lnkd.in/gRRBFKN5 #RealEstate #InvestmentStrategy #GeographicDiversification #SmartInvesting

Ever wondered what makes some teams soar while others struggle? A new study finds that a team member with average solo performance is the best team player, and the top performer works best alone. However, pairing low and high-performing members into a team doesn’t improve the success rate. “Pairing up agents of very different types hurts performance. These findings suggest that we may want to pair up agents who show moderate differences in their working ability,” says Mantian Hu, Associate Professor of the Department of Marketing at CUHK Business School. This strategy does not incur additional hiring costs, which is especially valuable for firms facing staff shortages or hiring freezes. The study also finds that the likelihood of closing a deal would be higher if teams included at least one female member and the members were older or had more education. Read more at https://lnkd.in/g_FwhJBm #TeamSuccess #Collaboration #Leadership #TeamDesign #Teamwork

Shadow banking offers interest rates above those offered by traditional bank deposits, drawing many to the allure of potentially higher returns. However, the absence of stringent regulation and oversight raises significant risks for those who choose to invest in this uncharted territory. A new study finds that Chinese banks often use shadow banking to fund long-term projects with short-term loans, making them vulnerable if they struggle to keep rolling them over. While bank depositors are protected by insurance, shadow banking products are not insured in any way. Read more: https://lnkd.in/g3WsffvG #ChinaFinance #ShadowBanking #BankingRisks #Investment

Shadow banking has grown tremendously in the past decades. High interest rates, higher than traditional bank deposits, have enticed many to invest their money. However, the lack of regulation and oversight poses risks for investors. “Shadow banking products are typically short-term and need to be rolled over frequently. Frequent rollover leads to more liquidity pressure and can lead to liquidity distress in bad times,” says Su Yang, Assistant Professor of Finance at CUHK Business School. Professor Su found that Chinese banks often use shadow banking to fund long-term projects with short-term loans, making them vulnerable if they struggle to keep rolling them over. While bank depositors are protected by insurance, shadow banking products are not insured in any way, making them a risky option for investment. #ChinaFinance #ShadowBanking #BankingRisks #StayInformed Read more: https://lnkd.in/g3WsffvG

As the world has had to adapt to remote working, a recent study dives into how this shift impacts audit practices. Some audit firms had been using remote auditing before the pandemic, but social restrictions brought by the pandemic have jump-started the digital transformation process. “The views of the auditors in the field suggest remote auditing, triggered by the pandemic, becomes an irreversible trend in the auditing industry,” says Xin Xiangang, Associate Professor at the School of Accountancy at CUHK Business School. Despite the challenges, the study found that the adverse effect of remote auditing can be mitigated by adjusting audit procedures timely, adopting risk-based approaches, emphasising the sufficiency and reliability of digital evidence, and greater use of information technology. Read more: https://lnkd.in/gWVb2NYp #RemoteAuditing #AuditQuality #BusinessInnovation #DigitalTransformation

Did you know that small creators on short video platforms like TikTok, Instagram, RedNote, and the like contribute not only to content diversity but also to the overall viewing experience? A new study found that small creators bring a unique range of topics and perspectives that appeal to active viewers. “To maximise viewer engagement, a platform should support and promote small creators to keep active viewers engaged. At the same time, it should attract and retain less active viewers by offering popular, high-quality content from star creators,” says Renyu (Philip) Zhang, Associate Professor of the Department of Decisions, Operations and Technology at CUHK Business School. As not all small creators can produce quality content, platforms can strategically allocate traffic to small creators who are relatively more popular to foster their growth and development and those who are more likely to engage their followers. Read more: https://lnkd.in/gracsyPM #ContentCreators #TikTok #RedNote #ViewerEngagement #SupportSmallCreators

Tech advancements like AI and blockchain are game-changers, but innovative business models can be equally, if not more, disruptive. Take a look at budget airlines that have transformed the aviation industry by adopting unique business models. “Their core business is very disruptive but mostly business-driven, not technology-driven,” says Dominic Chan, Associate Professor of Practice in Entrepreneurship at the Department of Decisions, Operations and Technology at CUHK Business School. “It’s a win-win because the passengers pay less for tickets, and airlines can make money. To be sustainable, the business model has to be win-win.” Many cases have also shown budget airlines went bankrupt due to its inability to cut costs effectively while ensuring a win-win strategy. Therefore, Professor Chan highlights, at the very core of industry disruption through business models is our understanding of customer needs and value creation. Read more at https://lnkd.in/gry9Jzsf #Innovation #Entrepreneurship #Strategy #GrowthMindset

Last year was the warmest year on record, according to NASA. While many are still sceptical about global warming, a new study found that experiencing extreme weather may change their mind. “The experience of hotter local temperatures would lead to a less perceived psychological distance of climate change and, in turn, attenuate climate change conspiracy beliefs,” says Hong Ying-yi, Choh-Ming Li Professor of Management at CUHK Business School. The findings could have implications for businesses in sectors sensitive to climate conditions, especially those investing in the green economy. Understanding public perceptions of climate change would be useful for organisations to develop strategies in communication, marketing, and sustainability practices. Read more at https://lnkd.in/gtxTug_e #ClimateChange #GlobalWarming #Sustainability

Senior travellers are reshaping the tourism landscape. However, many seniors still face challenges in choosing a suitable holiday destination for them. With the Spring Festival just around the corner, understanding this issue can help businesses better cater to seniors and ensure a wonderful travel experience for them. “The world is rapidly advancing technologically and witnessing a significant demographic shift towards an ageing population, but we discovered that limited internet abilities among seniors act as limiters rather than complete barriers,” says Lisa C. Wan, Associate Professor of the School of Hotel and Tourism Management and Department of Marketing at CUHK Business School. Professor Wan's study highlights that seniors with higher internet literacy tend to focus more on attractive spots, while those less familiar with technology lean on what's practical. This preference is influenced by their sense of autonomy. “Our findings demonstrate that a lack of internet abilities does not necessarily prevent seniors from travelling, but encourages them to adopt alternative travel approaches that are deemed more feasible for them,” she adds. Read more at https://lnkd.in/gkmkhZBP #SeniorTravel #SpringFestival #TourismInsights