IDEAS home Printed from https://ideas.repec.org/p/soa/wpaper/178.html
   My bibliography  Save this paper

How Much Has Private Credit Lending Reacted to Monetary Policy in China? The Case of Wenzhou

Author

Listed:
  • Duo Qin

    () (Department of Economics, SOAS, University of London, UK)

  • Zhong Xu

    (People's Bank of China)

  • Xue-Chun Zhang

    (People's Bank of China)

Abstract

This study investigates empirically what the major factors are which have driven Wenzhou’s informal credit market and how much that market is responsive to monetary policies and the formal banking conditions nationwide. The main findings are: (i) the informal credit lending rates are highly receptive to monetary policies; (ii) the market is dominantly demand driven; (iii) the informal lending is substitutive to bank savings in the short run but complementary to banking lending in the long run; and (iv) the market is complementary to excessive investments in the local real estate market.

Suggested Citation

  • Duo Qin & Zhong Xu & Xue-Chun Zhang, 2013. "How Much Has Private Credit Lending Reacted to Monetary Policy in China? The Case of Wenzhou," Working Papers 178, Department of Economics, SOAS, University of London, UK.
  • Handle: RePEc:soa:wpaper:178
    as

    Download full text from publisher

    File URL: http://www.soas.ac.uk/economics/research/workingpapers/file81927.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Madestam, Andreas, 2014. "Informal finance: A theory of moneylenders," Journal of Development Economics, Elsevier, vol. 107(C), pages 157-174.
    2. Carpenter, Seth B, 1999. "Informal Credit Markets and the Transmission of Monetary Policy: Evidence from South Korea," Review of Development Economics, Wiley Blackwell, vol. 3(3), pages 323-335, October.
    3. Allen, Franklin & Qian, Jun & Qian, Meijun, 2005. "Law, finance, and economic growth in China," Journal of Financial Economics, Elsevier, vol. 77(1), pages 57-116, July.
    4. Atieno, Rosemary, 2009. "Linkages, Access to Finance and the Performance of Small-Scale Enterprises in Kenya," WIDER Working Paper Series 006, World Institute for Development Economic Research (UNU-WIDER).
    5. Ngalawa, Harold & Viegi, Nicola, 2013. "Interaction of formal and informal financial markets in quasi-emerging market economies," Economic Modelling, Elsevier, vol. 31(C), pages 614-624.
    6. Hansen, Bruce E., 1992. "Testing for parameter instability in linear models," Journal of Policy Modeling, Elsevier, vol. 14(4), pages 517-533, August.
    7. Gupta, Manash Ranjan & Chaudhuri, Sarbajit, 1997. "Formal Credit, Corruption and the Informal Credit Market in Agriculture: A Theoretical Analysis," Economica, London School of Economics and Political Science, vol. 64(254), pages 331-343, May.
    8. Guirkinger, Catherine, 2008. "Understanding the Coexistence of Formal and Informal Credit Markets in Piura, Peru," World Development, Elsevier, vol. 36(8), pages 1436-1452, August.
    9. Hendry, David F., 1995. "Dynamic Econometrics," OUP Catalogue, Oxford University Press, number 9780198283164.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    informal credit market; monetary policy;

    JEL classification:

    • G19 - Financial Economics - - General Financial Markets - - - Other
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:soa:wpaper:178. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Duo QIN). General contact details of provider: http://edirc.repec.org/data/desoauk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.