Financial intermediation and growth - Chinese style

Genevieve Boyreau-Debray

No 3027, Policy Research Working Paper Series from The World Bank

Abstract: The author analyzes the relationship between growth and financial intermediation at the sub-national level within China. Does the quality of the banking sector in a province affect its rate of growth? Do state and non-state banking sectors perform differently? Does the structure of the local banking sector affect the rate of provincial economic growth? To answer these questions, the author first uses evidence on the fragmentation of regional capital markets to justify the existence of local credit channels. Second, using a dataset of 26 provinces between 1990 and 1999, she defines and introduces indicators of local banking development into the traditional growth regression framework using the GMM-system estimator. The results suggest that credit extended by the banking sector at the state level has a negative impact on provincial economic growth. This negative effect appears to be attributable to the burden of supporting the state-owned corporate sector rather than to the poor performance of state-owned banks. Moreover, provinces with more diversified banking sectors appear to grow faster.

Keywords: Payment Systems&Infrastructure; Economic Theory&Research; Financial Intermediation; Banks&Banking Reform; Fiscal&Monetary Policy; Banks&Banking Reform; Economic Theory&Research; Financial Intermediation; Financial Crisis Management&Restructuring; Environmental Economics&Policies (search for similar items in EconPapers)
Date: 2003-04-30
New Economics Papers: this item is included in nep-dev, nep-mac, nep-sea and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (88)

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