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The Impact of Bank and Non-Bank Financial Institutions on Local Economic Growth in China

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  • Xiaoqiang Cheng

    ()

  • Hans Degryse

    ()

Abstract

This paper shows that banking development spurs growth, even in a country with a high growth rate such as China. Employing data of 27 Chinese provinces over the period 1995-2003, we study whether the financial development of two different types of institutions ?banks and non-bank financial institutions ?have a (significantly different) impact on local economic growth. Our findings show that banks outperform non-bank financial institutions. Only banking development exerts a statistically and economically significant positive impact on local economic growth. This effect becomes more pronounced when the financial sector is less concentrated.

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1007/s10693-009-0077-4
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Bibliographic Info

Article provided by Springer in its journal Journal of Financial Services Research.

Volume (Year): 37 (2010)
Issue (Month): 2 (June)
Pages: 179-199

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Handle: RePEc:kap:jfsres:v:37:y:2010:i:2:p:179-199

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Web page: http://www.springerlink.com/link.asp?id=102934

Related research

Keywords: Growth; Financial development; Chinese provinces; Banks; E44; G21;

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Citations

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Cited by:
  1. Guariglia, Alessandra & Liu, Xiaoxuan & Song, Lina, 2011. "Internal finance and growth: Microeconometric evidence on Chinese firms," Journal of Development Economics, Elsevier, vol. 96(1), pages 79-94, September.
  2. Andreas Madestam, 2009. "Informal Finance: A Theory of Moneylenders," Working Papers 2009.69, Fondazione Eni Enrico Mattei.
  3. Ying Xu, 2009. "How does financial system efficiency affect the growth impact of FDI in China?," Asia Pacific Economic Papers 383, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
  4. Ayyagari, Meghana & Demirguc-Kunt, Asli & Maksimovic, Vojislav, 2008. "Formal versus informal finance : evidence from China," Policy Research Working Paper Series 4465, The World Bank.
  5. Jun Du & Sourafel Girma, 2011. "Cost economies, efficiency and productivity growth in the Chinese banking industry: evidence from a quarterly panel dataset," Empirical Economics, Springer, vol. 41(1), pages 199-226, August.
  6. Chong, T.T.L. & Lu, L. & Ongena, S., 2012. "Does Banking Competition Alleviate or Worsen Credit Constraints Faced by Small and Medium Enterprises? Evidence from China (Replaces CentER DP 2011-006)," Discussion Paper 2012-013, Tilburg University, Center for Economic Research.
  7. Chong, T.T.L. & Lu, L. & Ongena, S., 2011. "Does Banking Competition Alleviate or Worsen Credit Constraints Faced by Small and Medium Enterprises? Evidence from China (Replaced by CentER DP 2012-013)," Discussion Paper 2011-006, Tilburg University, Center for Economic Research.
  8. Guariglia, Alessandra & Poncet, Sandra, 2008. "Could financial distortions be no impediment to economic growth after all? Evidence from China," Journal of Comparative Economics, Elsevier, vol. 36(4), pages 633-657, December.
  9. Du, Jun & Girma, Sourafel, 2009. "Source of Finance, Growth and Firm Size ? Evidence from China," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  10. Christer Ljungwall & Junjie Li, 2007. "Financial Sector Development, FDI and Economic Growth in China," Finance Working Papers 22026, East Asian Bureau of Economic Research.

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