Growth-Financial Intermediation Nexus in China

By Jahangir Aziz, Christoph K. Duenwald. Social Science Research Network, 2002

128 citations recorded by the source corpus.

This paper studies the relationship between economic growth and financial development in China during the post-1978 reform period. Recent studies, based on cross-country data, have found a positive association between these two variables. We find that while a positive correlation between growth and financial intermediation exists in China, the association is more apparent than real. The nonstate sector, which contributed most to China's remarkable growth during this period, did not use the domestic financial system in any substantial way for financing. The same appears to be true for the faster-growing provinces. Compared to foreign investment, domestic private credit played a relatively small, although statistically significant, role in financing the nonstate sector and fast-growing provinces.

View Paper: https://www.semanticscholar.org/paper/11ddef6dac5d589d16197ec9b2555d1e2bcabcb0

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1. Iftekhar Hasan
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Citations in the corpus

• Development of financial intermediation and economic growth: The Chinese experience (2006, background): “9 See Greenwood and Smith (1997).”
• Institutional Development, Financial Deepening and Economic Growth: Evidence from China (2006, background): “Aziz and Duenwald (2002) and Boyreau-Debray (2003) both find little influence of financial sector depth at the provincial level on growth primarily because little credit growth in the 1990s went to the private sector.”