Financial Intermediation and Growth : Chinese Style

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.

Bibliographic Details

Main Author:	Boyreau-Debray, Genevieve
Language:	English en_US
Published:	World Bank, Washington, DC 2003-04
Subjects:	FINANCIAL INTERMEDIATION, GROWTH PATTERNS, BANKING SYSTEMS, CORPORATE FINANCE, PERFORMANCE INDICATORS, ECONOMIC GROWTH, CAPITAL MARKETS, REGIONAL ANALYSIS, CREDIT MARKETS, TRANSITION ECONOMIES, FRAGMENTATION, CREDIT EXPANSION, STATE-OWNED BANKS ACCOUNTING, AGRICULTURE, BALANCE SHEET, BANK, BANK ASSETS, BANK CREDIT, BANK LENDING, BANK LIQUIDITY, BANK LOANS, BANKING SECTOR, BANKING SECTOR DEVELOPMENT, BANKING STABILITY, BANKING SYSTEM, BANKS, BENCHMARK, CAPITAL ACCUMULATION, CAPITAL FORMATION, CAPITAL MOBILITY, CENTRAL BANK, CENTRAL BANK LENDING, CENTRAL BANKS, CENTRAL GOVERNMENT CONTROL, COMMERCIAL BANKS, CORPORATE CONTROL, CORPORATE SECTOR, COUNTRY COMPARISONS, CREDIT, DEPOSITS, DEVALUATION, ECONOMIC ACTIVITY, ECONOMIC DEVELOPMENT, ECONOMIC PERFORMANCE, ECONOMIC RESEARCH, EMPIRICAL ANALYSIS, EMPIRICAL EVIDENCE, EMPLOYMENT, EQUILIBRIUM, EXCHANGE RATE, FINANCIAL DEEPENING, FINANCIAL INDICATORS, FINANCIAL INSTITUTIONS, FINANCIAL INTEGRATION, FINANCIAL INTERMEDIARIES, FINANCIAL MARKETS, FINANCIAL RESOURCES, FINANCIAL SECTOR, FINANCIAL SERVICES, FINANCIAL STABILITY, FINANCIAL SYSTEMS, FINANCING SOURCES, FOREIGN BANKS, FOREIGN EXCHANGE, FREE MARKETS, GDP, GDP PER CAPITA, GOVERNMENT BONDS, GROWTH MODELS, GROWTH RATE, HUMAN CAPITAL, INCOME, INCOME DISTRIBUTION, INDUSTRIALIZED COUNTRIES, INEFFICIENCY, LIVING STANDARDS, MARKET INTEGRATION, MONOPOLIES, MORAL HAZARD, MUNICIPALITIES, NATIONAL OUTPUT, PLANNED ECONOMY, PRIVATE HOUSING, PRODUCT MARKETS, PROFIT MAXIMIZATION, PROFITABILITY, PUBLIC ENTERPRISES, QUOTAS, REAL GDP, REAL SECTOR, RISK MANAGEMENT, RISK PREMIUMS, SAVINGS, SPECIALIZED BANKS, STATE BANKING, STATE BANKS, STATE ENTERPRISES, TIME SERIES, TRADING, WORLD TRADE ORGANIZATION, WTO, STATE-OWNED BANKS, ACCOUNTING,
Online Access:	http://documents.worldbank.org/curated/en/2003/04/2350351/financial-intermediation-growth-chinese-style https://hdl.handle.net/10986/18229
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