Could financial distortions be no impediment to economic growth after all? Evidence from China

Alessandra Guariglia and Sandra Poncet ()

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Abstract: Using data for 30 Chinese provinces over the period 1989-2003, this study examines the relationship between finance, and real GDP, capital, and total factor productivity growth. We find that traditionally used indicators of financial development and China-specific indicators measuring the level of state interventionism in finance are generally negatively associated with growth and its sources, while indicators measuring the degree of market driven financing in the economy are positively associated with them. These effects have been gradually declining over time, and are weaker for high FDI recipients, suggesting that FDI may be used to alleviate the costs associated with the inefficient banking sector.

Keywords: Financial development; Financial distortions; Economic growth; Capital accumulation; Productivity growth; China (search for similar items in EconPapers)
Date: 2008-12
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Citations: View citations in EconPapers (116)

Published in Journal of Comparative Economics, 2008, 36 (4), pp.633-657. ⟨10.1016/j.jce.2007.12.003⟩

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Journal Article: Could financial distortions be no impediment to economic growth after all? Evidence from China (2008)
Working Paper: Could financial distortions be no impediment to economic growth after all? Evidence from China (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00649295

DOI: 10.1016/j.jce.2007.12.003

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