Comparative Analysis Of China's Bond Issuance Based On Auction Theory

In modern market economy countries, bonds have become macro intervening tools for governments. In 1981, China started issuing Treasury bond. After that, the scales become larger and larger, and they play a more and more important role.What are the optimal auctions forms for the Government to issue bonds is becoming the important problem for the Government and the economists. The Government issuing treasury securities commonly use two auction forms: multi-price auction and single-price auction. Most economists recommend that the single-price auction is the best auction form for the Government. But people argue that the single-price auction can induce collusion between the bidders, in some equilibrium point, the multi-price auction can bring more expected revenues of the seller than the single-price auction. The theory study of the treasury auction has no conclusion, so the empirical study becomes more important.There are some empirical issues examined. The first issue is identifying whether there is a loser's nightmare in the single-price auction or in the multiple-price auction. The second issue is to identify whether there is a significant downward shading of bids in the multiple auction or in the single-price auction. The third issue pursues to find an answer empirically to the question of the revenue ranking between the multiple-price auction and the single-price auction. The forth issue tries to find out factors influence issuers'income under each auction forms.The significant contributions of this work are:1. Evidence that there is a significant difference in the bidding structure between the multiple-price auction and the single-price auction.2. Evidence that there is a significant downward shading of bids in the multiple-price auction format and in the single-price auction format. The single-price auction can include collusion. The multiple-price auction can induce loser's nightmare.3. Evident that the auction format is an economically significant choice for the auction participants a well as auctioneer.4. Different auction forms have different influential factors.