Financial Intermediation and Growth: Chinese Style

By Geneviève Boyreau-Debray. 2003

188 citations recorded by the source corpus.

The author analyzes the relationship between growth and financial intermediation at the sub-national level within China. Does the quality of the banking sector in a province affect its rate of growth? Do state and non-state banking sectors perform differently? Does the structure of the local banking sector affect the rate of provincial economic growth? To answer these questions, the author first uses evidence on the fragmentation of regional capital markets to justify the existence of local credit channels. Second, using a dataset of 26 provinces between 1990 and 1999, she defines and introduces indicators of local banking development into the traditional growth regression framework using the GMM-system estimator. The results suggest that credit extended by the banking sector at the state level has a negative impact on provincial economic growth. This negative effect appears to be attributable to the burden of supporting the state-owned corporate sector rather than to the poor performance of state-owned banks. Moreover, provinces with more diversified banking sectors appear to grow faster.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/db6f911b678a7950e77d5a3f929a3ec25c339697

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Citations in the corpus

Development of financial intermediation and economic growth: The Chinese experience (2006, background): “Boyreau-Debray (2003) argues that the degree of inter-provincial capital mobility is low in China, which makes the analysis of local financial intermediation's impact on local economic growth meaningful.”
Financial Development, Economic Efficiency and Productivity Growth: Evidence from China (2006, background): “However, a bi-directional causality between finance and productivity, in which they are both endogenously determined, has also been proposed in recent empirical works.”
A balancing act: Managing financial constraints and agency costs to minimize investment inefficiency in the Chinese market (2016, background): “For this reason, they find it easier to obtain credit from state-owned banks (Boyreau-Debray 2003; Bai et al. 2006).”
The Impact of Bank and Non-Bank Financial Institutions on Local Economic Growth in China (2010, background): “This effect has been documented in previous research dealing with China (see e.g. Boyreau-Debray (2003) and Démurger (2001)).”
Government Connections and Financial Constraints: Evidence from a Large Representative Sample of Chinese Firms (2013, unknown): “Their large SOE rivals also have better access to bank loans, as the state-owned banks show strong bias in favor of SOEs in their lending (Boyreau-Debray, 2003; Cull and Xu, 2003; Gordon and Li, 2003; Allen, Qian, and Qian, 2005; Boyreau-Debray and Wei, 2005; Cull, Xu, and Zhu, 2009; and Gordon and…”
Financial Constraints in China: Firm-Level Evidence (2010, unknown): “Overall, our results support the conjecture of Boyreau-Debray and Wei (2005) that the state-owned banking sector favors inefficient State Owned firms at the expense of private owned firms, which face financial constraints that hinder them to grow.”
Formal Versus Informal Finance : Evidence from China (2008, unknown): “While Boyreau-Debray (2003) shows that banking depth is negatively correlated with interprovincial differences in growth rates, several other studies, including Liu and Li (2001), Zhou and Wang (2002), and Cheng and Degryse (2006), find that banking development is positively associated with growth…”
Institutional Development, Financial Deepening and Economic Growth: Evidence from China (2006, background): “Chen and Feng (2000) find that growth of private and semi-private enterprises leads to an increase in economic growth while the presence of SOEs reduces growth rates among the provinces based on their sample 29 Chinese provinces from 1978 through 1989.”
Financial Development, Growth, and Poverty : How Close are the Links? (2004, background): “In a recent working paper Genevieve Boyreau-Debray (2003) examines the banking-depth and growth relationship across 26 Chinese provinces.”
Financial development and economic growth: Recent evidence from China (2012, result): “However, this finding is contrary to several existing studies on the finance-growth relationship in China (Boyreau-Debray, 2003; Hasan, Wachtel and Zhou, 2007; Guariglia and Poncet, 2008).”