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FINANCIAL LIBERALIZATION IN CHINA - Limitations and lessons of the Japanese regime

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  • Thomas F Cargill
  • Elliott Parker

Abstract

China has reformed old socialist banking institutions, using the Japanese financial regime as a model. We explain why this regime can perform well in the short run but will ultimately lead to serious economic problems, as exemplified by the recent Asian financial crisis, and we explain the problems and consequences of financial liberalization. We conclude with a summary of lessons China's reformers should learn from the recent financial experiences of their Asian neighbors.

Suggested Citation

  • Thomas F Cargill & Elliott Parker, 2001. "FINANCIAL LIBERALIZATION IN CHINA - Limitations and lessons of the Japanese regime," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 6(1), pages 1-21.
    • Handle: RePEc:taf:rjapxx:v:6:y:2001:i:1:p:1-21
    DOI: 10.1080/13547860020024503
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    References listed on IDEAS

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    1. Thomas F. Cargill & Michael M. Hutchison & Takatoshi Ito, 1997. "The Political Economy of Japanese Monetary Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262032473, December.
    2. Chan Guk Huh & Sun Bae Kim, 1994. "Financial regulation and banking sector performance: a comparison of bad loan problems in Japan and Korea," Economic Review, Federal Reserve Bank of San Francisco, pages 18-29.
    3. Thomas F. Cargill & Michael M. Hutchison & Takatoshi Ito, 2001. "Financial Policy and Central Banking in Japan," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262032856, December.
    4. Edward J. Kane, 1985. "The Gathering Crisis in Federal Deposit Insurance," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262611856, December.
    5. Lardy,Nicholas R., 1992. "Foreign Trade and Economic Reform in China," Cambridge Books, Cambridge University Press, number 9780521414951.
    6. George Soros, 1999. "The International Financial Crisis," Challenge, Taylor & Francis Journals, vol. 42(2), pages 58-76, March.
    7. Kornai, Janos, 1992. "The Socialist System: The Political Economy of Communism," OUP Catalogue, Oxford University Press, number 9780198287766.
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    Cited by:

    1. Thomas F. Cargill & Elliott Parker, 2001. "Asian finance and the role of bankruptcy," Pacific Basin Working Paper Series 2001-01, Federal Reserve Bank of San Francisco.
    2. Cargill, Thomas F. & Parker, Elliott, 2002. "Asian finance and the role of bankruptcy: a model of the transition costs of financial liberalization," Journal of Asian Economics, Elsevier, vol. 13(3), pages 297-318.
    3. Andrea Fracasso, 2015. "Economic Rebalancing and Growth: the Japanese experience and China’s prospects," DEM Discussion Papers 2015/07, Department of Economics and Management.

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