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Quantifying the Effects of Financialisation and Leverage in China

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  • Sun, Lixin

Abstract

This paper attempts to examine the effects of financialisation and leverage on China’s economic growth and income inequality. The empirical results suggest that the effects of the financialisation indicators are ambiguous and weak; however the leverage indicators do have negative impacts. We find that the ratio of non-financial private debt to GDP has significantly negative impact on China’s growth, whereas the effects of the ratio of public debt to GDP are insignificant. Moreover, at the disaggregated level of non-financial private debt, it is the higher non-financial corporate debt level rather than the household debt level that remarkably undermines China’s economic growth. Finally, we find that the rise in the household debt level could significantly reduce the income inequality, and the ratio of M2 to GDP is positively related with the income inequality in China.

Suggested Citation

  • Sun, Lixin, 2015. "Quantifying the Effects of Financialisation and Leverage in China," MPRA Paper 69938, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:69938
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    Cited by:

    1. Ewa Karwowski & Engelbert Stockhammer, 2017. "Financialisation in emerging economies: a systematic overview and comparison with Anglo-Saxon economies," Economic and Political Studies, Taylor & Francis Journals, vol. 5(1), pages 60-86, January.
    2. B M, Lithin & chakraborty, Suman & iyer, Vishwanathan & M N, Nikhil & ledwani, Sanket, 2022. "Modeling asymmetric sovereign bond yield volatility with univariate GARCH models: Evidence from India," MPRA Paper 117067, University Library of Munich, Germany, revised 05 Jan 2023.

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    More about this item

    Keywords

    Leverage; Financialisation; Economic Growth; Income Inequality; China’s Economy;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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