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

  • Xiaoqiang Cheng


  • Hans Degryse


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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Article provided by Springer & Western Finance Association in its journal Journal of Financial Services Research.

Volume (Year): 37 (2010)
Issue (Month): 2 (June)
Pages: 179-199

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Handle: RePEc:kap:jfsres:v:37:y:2010:i:2:p:179-199
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