On the Empirics of China's Inter-regional Risk Sharing

Jia Li

MPRA Paper from University Library of Munich, Germany

Abstract: This study provides a comprehensive investigation on the mechanisms of risk sharing among China's provinces over the period 1995-2009. Using three empirical techniques, we found that, first, the extent of risk sharing attained by the provinces is relatively limited, and the financial liberalization since the late 1990s has not helped improve the degree of risk sharing. Second, credit market, compared to capital market, capital depreciation, and tax-transfer system, has been the single operative channel of risk sharing in China. Third, there are possibilities for China to gain the benefits of risk sharing from various institutional factors. In particular, though still insignificant, rural-urban migration, formal financial system and fiscal transfer appear to start to promote risk sharing recently. In contrast, FDI seems to be a dis-smoothing factor in China.

Keywords: Risk sharing; financial liberalization; China (search for similar items in EconPapers)
JEL-codes: C0 C2 E2 G0 (search for similar items in EconPapers)
Date: 2012-03
New Economics Papers: this item is included in nep-pbe, nep-rmg and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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