Insights

With the deep integration of manufacturing into the global economy, industrial production has long been seen as a key driver behind economic growth. However, today’s lack of information transparency in firms’ operating activities, difficulty in accessing real-time data, and long update cycles have impeded the effective reflection of the true dynamics of firms on the front line of production and manufacturing via indirect indicators, which traditionally rely on financial statements and consumer behaviors. The lag and incompleteness of information monitoring can no longer meet the market demand for early risk identification and accurate assessment of a firm’s operating conditions.

Nowcasting Firms’ Operating Activities from Satellite Data on Thermal Infrared Radiation, a collaborative research paper by Professor Zhang Bohui from the School of Management and Economics (SME), The Chinese University of Hong Kong, Shenzhen (CUHK-Shenzhen); Xue Yuan, a postdoctoral fellow from Henan University; and Professor Zhao Xiaofeng from Lingnan University, measures firms’ operating activities by constructing a firm-level thermal infrared radiation (TIR) indicator through satellite data on TIR for the first time. The research expands the application of satellite data in finance, providing innovative measurement tools and reference indicators for academic and industrial research and analysis of early business operations and business fundamentals. It demonstrates the value of physical signals in monitoring micro-level business operations and offers new insights into addressing information opacity. The research paper was published online in the Journal of Financial and Quantitative Analysis, a top journal in international finance.

About the Author

Professor Zhang Bohui

Executive Dean of SME, Associate Director of Shenzhen Institute of Data Economy (SIDE), and Director of the Center for FinTech and Social Finance at Shenzhen Finance Institute (SFI), CUHK-Shenzhen

Research Field

Role of Information Intermediaries on Capital Markets, Chinese and Foreign Capital Markets, Fintech, and Sustainable Finance

Co-authors

Xue Yuan

Henan University

Zhao Xiaofeng

Lingnan University