The Contradiction in China’s Gradualist Banking Reforms
AbstractChina’s state-owned banks historically have funded money losing enterprises to maintain employment and social stability. We survey the banking industry in China, focusing on the largest banks which are being reformed to increase their competitiveness following China’s 2001 WTO commitment to open the domestic banking market by 2007. We assemble macroeconomic, microeconomic and anecdotal evidence suggesting that government influence, while less explicit than in the past, is continuing despite the reforms. Indeed, the reforms thus far do not resolve the tensions between government influence and the obligation of widely-held commercial banks to make credit decisions based on objective appraisal of borrowers’ ability to repay. We conclude that when growth slows the contradiction will become fully apparent and the government will resolve it by again bailing out the banks. We describe a pair of alternative bank reform proposals that would help to reconcile the government’s conflicting objectives.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. 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.
Bibliographic InfoPaper provided by Rotman Institute for International Business, Joseph L. Rotman School of Management, University of Toronto in its series Working Papers Series with number 08.
Length: 51 Pages
Date of creation: Aug 2006
Date of revision:
Other versions of this item:
- Wendy Dobson & Anil K. Kashyap, 2006. "The Contradiction in China's Gradualist Banking Reforms," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 37(2), pages 103-162.
- NEP-ALL-2008-04-04 (All new papers)
- NEP-CNA-2008-04-04 (China)
- NEP-CSE-2008-04-04 (Economics of Strategic Management)
- NEP-ENT-2008-04-04 (Entrepreneurship)
- NEP-INO-2008-04-04 (Innovation)
- NEP-IPR-2008-04-04 (Intellectual Property Rights)
- NEP-MIC-2008-04-04 (Microeconomics)
- NEP-TRA-2008-04-04 (Transition Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ogawa, Eiji & Ito, Takatoshi, 2002.
"On the Desirability of a Regional Basket Currency Arrangement,"
Journal of the Japanese and International Economies,
Elsevier, vol. 16(3), pages 317-334, September.
- Eiji Ogawa & Takatoshi Ito, 2000. "On the Desirability of a Regional Basket Currency Arrangement," NBER Working Papers 8002, National Bureau of Economic Research, Inc.
- Guonan Ma & Robert N. McCauley, 2007. "Do China's capital controls still bind? Implications for monetary autonomy and capital liberalisation," BIS Working Papers 233, Bank for International Settlements.
- Tavlas, G.S., 1991. "On the International Use of Currencies: the Case of the Deutsche Mark," Princeton Studies in International Economics 181, International Economics Section, Departement of Economics Princeton University,.
- Black, Stanley W., 1985. "International money and international monetary arrangements," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 2, chapter 22, pages 1153-1193 Elsevier.
- Hartmann,Philipp, 2007.
"Currency Competition and Foreign Exchange Markets,"
Cambridge University Press, number 9780521046930, November.
- Francis E. Warnock & Veronica Cacdac Warnock, 2006. "International Capital Flows and U.S. Interest Rates," NBER Working Papers 12560, National Bureau of Economic Research, Inc.
- David Dollar & Shang-Jin Wei, 2007.
"Das (Wasted) Kapital: Firm Ownership and Investment Efficiency in China,"
NBER Working Papers
13103, National Bureau of Economic Research, Inc.
- David Dollar & Shang-Jin Wei, 2007. "Das (Wasted) Kapital: Firm Ownership and Investment Efficiency in China," IMF Working Papers 07/9, International Monetary Fund.
- Eichengreen, B. & Masson, P. & Savastano, M. & Sharma, S., 1999. "Transition Strategies and Nominal Anchors on the Road to Greater Exchange-Rate Flexibility," Princeton Essays in International Economics 213, International Economics Section, Departement of Economics Princeton University,.
- Masson, Paul R., 2008. "The euro and developing country finance: A survey," The North American Journal of Economics and Finance, Elsevier, vol. 19(2), pages 175-191, August.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wendy Dobson) The email address of this maintainer does not seem to be valid anymore. Please ask Wendy Dobson to update the entry or send us the correct address.
If references are entirely missing, you can add them using this form.