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The Impact of Bank and Non-Bank Financial Institutions on Local Economic Growth in China

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  • Xiaoqiang Cheng
  • Hans Degryse

Abstract

This paper shows that banking development spurs growth, even in a country with a high growth rate such as China. Employing data of 27 Chinese provinces over the period 1995-2003, we study whether the financial development of two different types of institutions ?banks and non-bank financial institutions ?have a (significantly different) impact on local economic growth. Our findings show that banks outperform non-bank financial institutions. Only banking development exerts a statistically and economically significant positive impact on local economic growth. This effect becomes more pronounced when the financial sector is less concentrated.
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  • Xiaoqiang Cheng & Hans Degryse, 2010. "The Impact of Bank and Non-Bank Financial Institutions on Local Economic Growth in China," Journal of Financial Services Research, Springer;Western Finance Association, vol. 37(2), pages 179-199, June.
    • Handle: RePEc:kap:jfsres:v:37:y:2010:i:2:p:179-199
    DOI: 10.1007/s10693-009-0077-4
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    More about this item

    Keywords

    Growth; Financial development; Chinese provinces; Banks; E44; G21;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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