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Bank fund reallocation and economic growth: Evidence from China

  • Chang, Philip C.
  • Jia, Chunxin
  • Wang, Zhicheng
Registered author(s):

    This paper examines bank fund reallocation and regional economic growth based on 1991-2005 provincial-level data of four state-owned commercial banks of China that practice fund reallocation nation-wide. We find no correlation between bank fund reallocation and regional economic growth or between bank loans and regional economic growth. We find, however, a positive association between bank deposits and growth. It appears economic growth leads financial development in China, not the other way around. Furthermore, as China's market-oriented reforms deepen, fund reallocation and loans start to manifest positive effects on growth even though the banks are government owned.

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    Article provided by Elsevier in its journal Journal of Banking & Finance.

    Volume (Year): 34 (2010)
    Issue (Month): 11 (November)
    Pages: 2753-2766

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    Handle: RePEc:eee:jbfina:v:34:y:2010:i:11:p:2753-2766
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