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State banks and economic development in China

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  • James Laurenceson

    (Department of Economics, University of Queensland, Australia)

  • J. C. H. Chai

    (Department of Economics, University of Queensland, Australia)

Abstract

State-owned banks remain dominant in China's financial sector despite over two decades of gradual financial liberalization. Their performance is typically evaluated using commercial banking criteria. The standard view is that because state banks have experienced declining profitability and capital adequacy, they have been a drain on past economic development and endanger future growth prospects. However, we argue that state banks have strong development bank characteristics and hence warrant different performance criteria. The analysis in this paper suggests that while thier commercial performance may have been poor, the overall impact of state banks on China's economic development appears to have been both positive and sustainable. Copyright © 2001 John Wiley & Sons, Ltd.

Suggested Citation

  • James Laurenceson & J. C. H. Chai, 2001. "State banks and economic development in China," Journal of International Development, John Wiley & Sons, Ltd., vol. 13(2), pages 211-225.
    • Handle: RePEc:wly:jintdv:v:13:y:2001:i:2:p:211-225
    DOI: 10.1002/jid.727
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    References listed on IDEAS

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    Cited by:

    1. Hong Zhuang & Haiyan Yin & Miao Wang & Jiawen Yang, 2019. "Bank Efficiency and Regional Economic Growth: Evidence from China," Annals of Economics and Finance, Society for AEF, vol. 20(2), pages 661-689, November.
    2. 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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