This study aims to reassess the finance-growth nexus debate in China, and consequently illustrate the channels through which financial development gives impact on China’s economic growth after 1978. Specifically, this study addresses two channels through which the effects operate, i.e., physical capital accumulation and productivity improvement. The study adopts an approach called channel decomposition which combines the conventional accounting framework and regression analysis. The empirical analysis, using a panel dataset of Chinese provinces between 1980 and 2004, argues that: (1) the relationship between financial development and economic growth in China tends to be a long-run one; (2) the direction of causality between financial development and economic growth has presumably run from the former to the latter in China; (3) the impacts induced by various measures of financial system exert on economic growth are different, and the channels through which they give impact on the growth are different as well; (4) the existence of inter-regional heterogeneity in the context of China’s finance-growth nexus tends to be sensitive to the selection of financial variables.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
14409.
Length: Date of creation: 23 Mar 2009 Date of revision: Publication status: Published in ICCS Journal of Modern Chinese Studies 1.1(2009): pp. 51-82 Handle: RePEc:pra:mprapa:14409