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Banking Competition and Households’ Informal Financing: Evidence from China Household Finance Survey

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  • Pengcheng Du
  • Hua Cheng

Abstract

This study explores the relationship between Chinese banking industry competition and Chinese households’ informal financing behavior. Using the China Household Finance Survey and bank branch data, this study uniquely provides insight on the so-called Chinese growth miracle, despite its underdeveloped formal financial system. Its results suggest that banking competition significantly impacts informal financing adoption, and that householders choose informal financing when they are formally financially constrained. This study has significant implications for policy makers as formal financing systems engage with the existing informal financial market, suggesting that policy makers should endeavor to balance and regulate this relationship.

Suggested Citation

  • Pengcheng Du & Hua Cheng, 2022. "Banking Competition and Households’ Informal Financing: Evidence from China Household Finance Survey," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 58(2), pages 525-543, January.
  • Handle: RePEc:mes:emfitr:v:58:y:2022:i:2:p:525-543
    DOI: 10.1080/1540496X.2020.1784139
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    Cited by:

    1. Mago, Stephen & Sewela Modiba, Florah, 2022. "Does informal finance matter for micro and small businesses in Africa?," Small Business International Review, Asociación Española de Contabilidad y Administración de Empresas - AECA, vol. 6(1), pages 415-415, March.

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