Lending for growth? A Granger causality analysis of China’s finance–growth nexus

Fredrik Andersson, Katarzyna Burzynska () and Sonja Opper ()
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Katarzyna Burzynska: Radboud University Nijmegen
Sonja Opper: Lund University

Empirical Economics, 2016, vol. 51, issue 3, No 2, 897-920

Abstract: Abstract China’s banking sector is dominated by four distinct organizational forms: policy banks (PBs), state-owned commercial banks (SOCBs), joint stock commercial banks (JSCBs), and rural credit cooperatives (RCCs). Economic analyses have especially focused on the development of bank efficiency and profitability over time. The equally important question, which of China’s banking institutions promote economic growth, has not been explored using macroeconomic data. Our study uses a novel data set covering the period 1997–2008 and employs Granger causality tests to estimate the finance–growth nexus of each of these bank types. Our results show that SOCBs and RCCs do not Granger-cause GDP growth and that SOCBs even have a negative effect on manufacturing growth. By contrast, PBs and JSCBs promote economic growth.

Keywords: China; Banking sector; Economic growth; Government-owned banks (search for similar items in EconPapers)
JEL-codes: E44 G21 O16 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (7)

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Working Paper: Lending for Growth? A Granger Causality Analysis of China's Finance-Growth Nexus (2014)
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DOI: 10.1007/s00181-015-1034-8

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