Financial Sector Development and Growth: The Chinese Experience

Abstract

This paper documents the financial and institutional developments of China during the past two decades, when China was successfully transformed from a rigid centralplanning economy to a dynamic market economy following its unique path. We empirically examine the relationship between financial development and economic growth in China by employing a panel sample covering 31 Chinese provinces during the important transition period 1986-2002. Our evidence suggests that the development of financial markets, institutions, and instruments have been robustly associated with economic growth in China.

“Enter the dragoness”: firm growth, finance,guanxi, and gender in China

“…Phase 1 covers the period 1979-1993, when the economy started to move from a command economy to free market. This era saw development of "transitional institutions" through experiment and innovations (Hasan and Zhou, 2006). During this stage, we observe expansion of non-state enterprises (Qian, 1999).…”

“…To this end, China has instituted structural reforms of financial institutions since 1979. This change has led to the growth of private sector institutions (Hasan and Zhou, 2006) and according to the International Financial Statistics Yearbook (1997) the banking sector has grown by 50 percent from 1990 to 1997. The availability of credit in the market has risen from 4.3bn in 1993 to 10.3bn RMB in 1997(International Monetary Fund, 1997.…”

“…As part of the process of financial institutional reform was the establishment of a central bank, the People's Republic Bank, in 1994 (Hasan and Zhou, 2006). From 1996 to 1998, urban credit co-operatives (1,500) and rural credit co-operatives (60,000) gained Firm growth, finance, guanxi, and gender importance as they engaged with SMEs and started to overcome a finance gap that bank finance was not able to fill (Hasan and Zhou, 2006). Competition intensified with granting licenses to foreign and non-state commercial banks (Hasan and Zhou, 2006).…”

Finance And Poverty Reduction In China: An Empirical Investigation

“…Since 1994 a series of major banking reforms has taken place (see Hasan and Zhou 2006). These include, amongst others: 1) establishment of three policy banks in 1994, which include the State Development Bank, the Agricultural Development Bank, and the Export-Import Bank of China; 2) transformation of the urban credit cooperative into a commercial bank, which took place during 1996-1998; 3) granting licenses to non-state commercial banks; 4) granting licenses to some foreign banks; 5) reduction of government intervention in the credit allocation; and 6) loosening the controls on interest rates, etc.…”

Does Financial Development Lead to Poverty Reduction in China? Time Series Evidence

“…In addition to these early reforms, China undertook a series of banking reforms from 1994 onwards (see Hasan andZhou, 2006, Zhang et al, 2012;Lin et al, 2015). First of all, three policy banks, namely, the Export-Import Bank of China, the Agricultural Development Bank, and the State Development Bank, were set up in 1994 to relieve the policy lending activities of the state-owned commercial banks.…”