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Reconciling the Chinese Financial Development with its Economic

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  • Jean-Claude Maswana

    (Kyoto University)

Abstract

Focused on the case of China’s financial development, the present discursive essay sets out to argue that if the Chinese financial system distorted the allocation of funds then economic growth could not be sustained and financial depth would remain deficient. The essay puts forward selected financial facts and policies, discusses their relevance in the particular context of China’s economic development goals and concludes that although the Chinese financial system is not developed according to the standards of industrialized countries, financial intermediation has nevertheless been efficient in terms of promoting savings and credit to the extent that might have been good enough to facilitate economic growth. Furthermore, in order to reconcile China’s financial efficiency-growth apparent paradox, the essay supports the view that analyzing China’s financial system using market-based standards may not be valid.

Suggested Citation

  • Jean-Claude Maswana, 2005. "Reconciling the Chinese Financial Development with its Economic," Development and Comp Systems 0511024, EconWPA.
  • Handle: RePEc:wpa:wuwpdc:0511024 Note: Type of Document - pdf; pages: 13. Essay on the Chinese Financial Development
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    File URL: http://econwpa.repec.org/eps/dev/papers/0511/0511024.pdf
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    References listed on IDEAS

    as
    1. Ross Levine & Norman Loayza & Thorsten Beck, 2002. "Financial Intermediation and Growth: Causality and Causes," Central Banking, Analysis, and Economic Policies Book Series,in: Leonardo Hernández & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.), Banking, Financial Integration, and International Crises, edition 1, volume 3, chapter 2, pages 031-084 Central Bank of Chile.
    2. Park, Albert & Sehrt, Kaja, 2001. "Tests of Financial Intermediation and Banking Reform in China," Journal of Comparative Economics, Elsevier, vol. 29(4), pages 608-644, December.
    3. Liu, Tung & Li, Kui-Wai, 2001. "Impact of liberalization of financial resources in China's economic growth: evidence from provinces," Journal of Asian Economics, Elsevier, vol. 12(2), pages 245-262.
    4. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 1999. "A new database on financial development and structure," Policy Research Working Paper Series 2146, The World Bank.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    China; financial development; growth-finance nexus;

    JEL classification:

    • O - Economic Development, Innovation, Technological Change, and Growth
    • P - Economic Systems

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