Financial Structure and Systemic Risk of Banks: Evidence from Chinese Reform

Guseon Ji, Daniel Sungyeon Kim and Kwangwon Ahn
Additional contact information
Guseon Ji: Moon Soul Graduate School of Future Strategy, Korea Advanced Institute of Science and Technology (KAIST), Daejeon 34141, Korea
Daniel Sungyeon Kim: HSBC Business School, Peking University, Shenzhen 518055, China
Kwangwon Ahn: Moon Soul Graduate School of Future Strategy, Korea Advanced Institute of Science and Technology (KAIST), Daejeon 34141, Korea

Sustainability, 2019, vol. 11, issue 13, 1-22

Abstract: Using Chinese data from 2006 to 2014, we find that a shift in the financial structure towards a more market-based structure can reduce the systemic risk of the banking sector. One transmission channel through which this occurs is the improvement in an individual firm’s debt repaying capacity, which is positively influenced by the development of stock markets. Another channel is the enhanced credit monitoring of borrowers by banks, owing to their slower credit growth. Our results imply that the shift toward market-based financial structure could lead to the development of financial market as well as the enhancement of the stability of an economy.

Keywords: financial structure; systemic risk; banking; China (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://www.mdpi.com/2071-1050/11/13/3721/pdf (application/pdf)
https://www.mdpi.com/2071-1050/11/13/3721/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:11:y:2019:i:13:p:3721-:d:246506

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().