Institutional Development, Financial Deepening and Economic Growth: Evidence from China

By P. Wachtel, Iftekhar Hasan, Mingming Zhou. Social Science Research Network, 2006

469 citations recorded by the source corpus.

There have been profound changes in both political and economic institutions in China over the last 20 years. Moreover, the pace of transition has led to variation across the country in the level of development. In this paper, we use panel data for the Chinese provinces to study the role of legal institutions, financial deepening and political pluralism on growth rates. The most important institutional developments for a transition economy are the emergence and legalization of the market economy, the establishment of secure property rights, the growth of a private sector, the development of financial sector institutions and markets, and the liberalization of political institutions. We develop measures of these phenomena, which are used as explanatory variables in regression models to explain provincial GDP growth rates. Our evidence suggests that the development of financial markets, legal environment, awareness of property rights and political pluralism are associated with stronger growth.

Subfields: Economics and Econometrics, Political Science and International Relations, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/8f8bb0cffe945e7cf1b329a88151a3fec12a8e13

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Citations in the corpus

The Effects of Focus versus Diversification on Bank Performance: Evidence from Chinese Banks (2010, unknown): “Heffernan (2009), Hasan et al. (2009), Jia (2009), Lin and Zhang (2009)).”
Stock market development and economic growth: Empirical evidence from China (2018, methodology): “Hasan et al. (2009) used a dynamic panel data framework of Chinese provinces to investigate the role of institutional components in a transitional economy.”
China׳s 19-year city-level carbon emissions of energy consumptions, driving forces and regionalized mitigation guidelines (2014, unknown): “As the statistical approach on data collection, reporting and validation was opaque, there were always significant discrepancies between national, provincial and citylevel official statistics of energy consumptions [16–19], which thereby led to unreliable conclusions.”
The Impact of Bank and Non-Bank Financial Institutions on Local Economic Growth in China (2010, background): “4 Theoretical efforts at modeling growth and financial development include Greenwood and Jovanovic (1990), Boyd and Smith (1992), King and Levine (1993b), and Acemoglu and Zillibotti (1997), to mention just a few. 5 La Porta et al. (1998) link the legal origin of a country to its financial developme”
Institutional quality thresholds and the finance Growth nexus. (2013, background): “5 Hauk and Wacziarg (2009) also point out that this may explain why Benhabib and Spiegel (2000) found no significant interaction between initial GDP and financial development using panel data on 92 countries from 1960 to 1985.”