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Reconciling the Chinese Financial Development with its Economic Growth: A Discursive Essay


  • Maswana, Jean-Claude


China‘s strong economic performance and its financial development outcomes are extremely difficult to reconcile with the dominant verdict that its financial system is seriously inefficient. Using an evolutionary perspective as a metaphor, this essay offered suggestions that adaptive efficiency criteria may help solve the apparent puzzle. An adaptive efficiency criterion offers conceptual as well as methodological approaches to resolving this puzzle and contradiction. The essay‘s discussions reveal that much of what critics cite as intermediation inefficiencies –non performing loans, directed credit allocation– are, in fact, a dissipative energy generating required spillovers fuelling the entire system. From this perspective, the essay argues that the relevant evaluation criterion for the Chinese financial system would be ―adaptive efficiency, instead of the conventional allocative one. This arises since China is an emerging economic system characterized primarily by state-owned financial institutions and whose goals are developmental.

Suggested Citation

  • Maswana, Jean-Claude, 2005. "Reconciling the Chinese Financial Development with its Economic Growth: A Discursive Essay," MPRA Paper 7241, University Library of Munich, Germany, revised Dec 2007.
  • Handle: RePEc:pra:mprapa:7241

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    References listed on IDEAS

    1. Joachim Merz, 1992. "Time Use Dynamics in Paid Work and Household Activities of Married Women - A Panel Analysis with Household Information and Regional Labour Demand," FFB-Discussionpaper 02, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    2. Merz, Joachim, 1991. "Microsimulation -- A survey of principles, developments and applications," International Journal of Forecasting, Elsevier, vol. 7(1), pages 77-104, May.
    3. Merz, Joachim & Faik, Jürgen, 1994. "Equivalence Scales Based on Revealed Preference Consumption Expenditure Microdata - The Case of West Germany," MPRA Paper 16297, University Library of Munich, Germany.
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    More about this item


    Financial Development; China; Adaptive Efficiency; Co-evolutionary Perspective;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • P20 - Economic Systems - - Socialist Systems and Transition Economies - - - General
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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