Financial Development, Economic Efficiency and Productivity Growth: Evidence from China

Sylviane Guillaumont Jeanneney (), HUA Ping () and LIANG Zhicheng ()
Additional contact information
HUA Ping: Centre National de la Recherche Scientifique
LIANG Zhicheng: Centre d'Etudes et de Recherches sur le Développement International

No 200625, Working Papers from CERDI

Abstract: Financial development may lead to productivity improvement in developing countries. In this paper, based on the Data Envelopment Analysis (DEA) approach, we use the Malmquist index to measure China's total factor productivity change and its two components (i.e., efficiency change and technical progress). We find that China has recorded an increase in total factor productivity from 1993 to 2001, and that productivity growth was mostly attributed to technical progress, rather than to improvement in efficiency. Moreover, using panel data set covering 29 Chinese provinces over the period of 1993-2001 and applying the Generalized-Method-of-Moment system estimation, we investigate the impact of financial development on productivity growth in China. Empirical results show that, during this period, financial development has significantly contributed to China's productivity growth, mainly through its favourable effect on efficiency.

Keywords: Chinese Economy; Financial Development; total factor productivity (search for similar items in EconPapers)
Date: 2006

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Related works:
Journal Article: FINANCIAL DEVELOPMENT, ECONOMIC EFFICIENCY, AND PRODUCTIVITY GROWTH: EVIDENCE FROM CHINA (2006)
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Persistent link: http://EconPapers.repec.org/RePEc:cdi:wpaper:846

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