China’s rural industrialization, which flourished in the 1980s, has suddenly declined since the mid-1990s. Based on the perspective of institutional change of rural collective construction land, this paper discusses the reasons behind the rise and fall of China’s rural industrialization. Using the empirical tests of China’s provincial panel data from 1987 to 1997, it is found that from the 1980s to the mid-1990s, the government relaxed the regulation of collective construction land and allowed its transfer, which was the institutional basis for the rapid rise of China’s rural industrialization with township and village enterprises (TVEs) as the main form. Furthermore, this paper takes the government’s policy of prohibiting the circulation of collective construction land from the mid-1990s as the breakthrough point, and uses the “Land Administration Law of China” promulgated in 1998 as a quasi-natural experiment to examine the causal relationship between restricting the circulation of collective construction land and the decline of TVEs. It is found that the restrictions on the circulation of collective construction land caused by the implementation of the law significantly hindered the development of TVEs. After the implementation of the Land Administration Law, in areas affected more by the law, the development scale of their TVEs shrunk even more. The analysis of this paper shows that deepening the reform of the system of property rights on agricultural land and ensuring farmers’ rights of land circulation are important ways to revitalize the rural areas.

We explore the impact and mechanism of bank regulatory penalties on corporate financial asset holdings. Using administrative penalty information published by the National Financial Regulatory Administration from 2011 to 2020, we construct an indicator of penalty intensity and match it with China's A-share listed firms for the empirical analysis. We find that high-intensity bank regulatory penalties can significantly reduce corporate holdings of financial assets. In particular, penalties related to the bank credit business have a more significant impact. Mechanism analysis shows that an increase in penalty intensity reduces firms' financial assets by weakening their motivations for precautionary savings and speculative profit seeking. Further analysis shows that bank regulatory penalties can improve firms' TFP. Our research conclusions provide new insights for understanding the actual economic consequences of bank regulatory penalties and encouraging firms to shift from virtuality to reality.