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: https://sites.google.com/site/econkatarzynaburzynska/
Sonja Opper: http://www.sonja-opper.com/

No 2014/6, Knut Wicksell Working Paper Series from Lund University, Knut Wicksell Centre for Financial Studies

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. Our study uses a novel data set covering the period 1997 to 2008 and employ 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 F43 G21 O16 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2014-09-30
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Lending for growth? A Granger causality analysis of China’s finance–growth nexus (2016)
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