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Lending for Growth? An Analysis of State-Owned Banks in China

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This paper provides the first comparative analysis of different types of publicly owned banks operating in China between 1997 and 2008. Using principal component analysis and Granger-causality tests, this study shows that China’s state-owned commercial banks and rural credit cooperatives did not promote GDP growth during the observation period. State-owned commercial banks even had a negative effect on growth in the manufacturing sector. By contrast, state policy banks and joint stock commercial banks did promote domestic growth. China’s experience presents a more nuanced picture of state banking that goes beyond the role of ownership to consider functional and institutional differences.

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  • Andersson, Fredrik N. G. & Burzynska, Katarzyna & Opper, Sonja, 2013. "Lending for Growth? An Analysis of State-Owned Banks in China," Working Papers 2013:19, Lund University, Department of Economics.
  • Handle: RePEc:hhs:lunewp:2013_019
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    Keywords

    China; Banking sector; Economic growth;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • P30 - Economic Systems - - Socialist Institutions and Their Transitions - - - General

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