Lessons for China from financial liberalization in Scandinavia

Hongyi Chen, Lars Jonung () and Olaf Unteroberdoerster

No 383, European Economy - Economic Papers 2008 - 2015 from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

Abstract: This study brings out policy lessons for China today, a financially repressed country, from the financial liberalization process in Denmakr, Finland, Norway and Sweden in the 1980s and early 1990s. This report identifies a set of policy lessons for China today from the experience of financial deregulation, financial crisis and recovery in Scandinavia during the period 1985-2000. Although there are considerable differences between the huge Chinese economy and the small Nordic countries, there are enough similarities to make lesson-drawing a worthwhile exercise. Based on the Scandinavian experience and the added complexity of China's status as a transition economy, financial reforms should strike a proper balance between being gradual (to avoid costly mistakes) and substantive (to secure efficiency gains in the longer term) with due consideration being given to initial conditions concerning regulation, taxes and exchange rate arrangements. A well managed process of financial deregulation requires that policy-makers and market participants fully understand the interlinkages between financial reforms and the rest of the economy. In addition, the supervisory and management systems in the financial sector should move in step with the liberalization process.

Keywords: Financial liberalization; financial crisis; transition; financial regulation; banking; boom-bust; China; Scandinavia; the Nordics (search for similar items in EconPapers)
JEL-codes: E52 E58 F31 F32 G01 G21 G28 G32 P52 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2009-08
New Economics Papers: this item is included in nep-ifn and nep-mac
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Lessons for China from Financial Liberalization in Scandinavia (2014)
Working Paper: Lessons for China from Financial Liberalization in Scandinavia (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:euf:ecopap:0383

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