The Financial Deepening-Productivity Nexus in China: 1987-2001
AbstractThe financial intermediation-growth nexus is a widely studied topic in the literature of development economics. Deepening financial intermediation may promote economic growth by mobilizing more investments, and lifting returns to financial resources, which raises productivity. Relying on provincial panel data from China, this paper attempts to examine if regional productivity growth is accounted for by the deepening process of financial development. Towards this end, an appropriate measurement of financial depth is constructed and then included as a determinant of productivity growth. It finds that a significant and positive nexus exists between financial deepening and productivity growth. Given the divergent pattern of financial deepening between coastal and inland provinces, this finding also helps explain the rising regional disparity in China.
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Bibliographic InfoPaper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number UNU-WIDER Research Paper RP2007/08.
Length: 16 pages
Date of creation: 2007
Date of revision:
growth; financial development; productivity; China;
Other versions of this item:
- Zhang Jun & Guanghua Wan & Yu Jin, 2007. "The Financial Deepening-Productivity Nexus in China: 1987-2001," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 5(1), pages 37-49.
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