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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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File URL: http://www.econ.kuleuven.be/licos/publications/dp/dp171.pdf
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Paper provided by LICOS - Centre for Institutions and Economic Performance, KU Leuven in its series LICOS Discussion Papers with number 17106.

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Length: 45 pages
Date of creation: 2006
Handle: RePEc:lic:licosd:17106
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