Banking Structure and Economic Growth : Evidence from China
With panel data for 28 Chinese provinces (autonomous regions, municipalities) during 1985-2002, this paper assesses the effect of banking structure on economic growth. Banking structure is defined as the relative importance of banks of different size in the banking sector. The market share of small banking institutions is taken as a proxy to measure the banking structure. In dealing with the potential endogeneity problem, this paper constructs an instrumental variable for banking structure with the information on the commercialization reform of state-owned banks initiated in 1994. The estimation results from a two-way fixed-effect model show that increases in the market share of small banking institutions enhance economic growth in contemporary China.
| Main Authors: | , |
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| Format: | Journal Article biblioteca |
| Language: | EN |
| Published: |
2009
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| Subjects: | Financial Markets and the Macroeconomy E440, Banks, Other Depository Institutions, Micro Finance Institutions, Mortgages G210, Production, Pricing, and Market Structure, Size Distribution of Firms L110, Firm Performance: Size, Diversification, and Scope L250, Economic Development: Financial Markets, Saving and Capital Investment, Corporate Finance and Governance O160, Socialist Systems and Transitional Economies: National Income, Product, and Expenditure, Money, Inflation P240, Socialist Institutions and Their Transitions: Financial Economics P340, |
| Online Access: | http://hdl.handle.net/10986/4703 |
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| Summary: | With panel data for 28 Chinese provinces (autonomous regions, municipalities) during 1985-2002, this paper assesses the effect of banking structure on economic growth. Banking structure is defined as the relative importance of banks of different size in the banking sector. The market share of small banking institutions is taken as a proxy to measure the banking structure. In dealing with the potential endogeneity problem, this paper constructs an instrumental variable for banking structure with the information on the commercialization reform of state-owned banks initiated in 1994. The estimation results from a two-way fixed-effect model show that increases in the market share of small banking institutions enhance economic growth in contemporary China. |
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