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Cheating under Regulation: Evidence from “Yin-and-Yang” Contracts on Beijing’s Housing Market

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  • Yanke Dai

    (School of Business, Shanghai University of International Business and Economics, Shanghai 201620, China)

  • Yangfei Xu

    (School of Business, Shanghai University of International Business and Economics, Shanghai 201620, China)

Abstract

This paper reveals the role of Yin-and-Yang contracts in evading transaction regulations in China’s housing market. Using micro-observations of Beijing’s housing resales, we find buyers are engaged in “Yin-and-Yang” contracts with higher degree of under-reporting during “the most stringent regulation in history”. We then estimate the extra tax loss from this further under-reporting as an unexpected side effect of regulation policies. Moreover, since “Yin-and-Yang” contracts put more liquidity pressure on the buyers, we also investigate the potential crowding-out effect and enlarged inequality after regulation.

Suggested Citation

  • Yanke Dai & Yangfei Xu, 2022. "Cheating under Regulation: Evidence from “Yin-and-Yang” Contracts on Beijing’s Housing Market," Sustainability, MDPI, vol. 14(20), pages 1-29, October.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:20:p:13346-:d:944938
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