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Lending for Growth? A Granger Causality Analysis of China's Finance-Growth Nexus

Andersson, Fredrik N G LU ; Burzynska, Katarzyna LU and Opper, Sonja LU (2016) In Empirical Economics 51(3). p.897-920
Abstract
China’s banking sector is dominated by four distinct organizational forms: policy banks (PBs), state-owned commercial banks (SOCBs), joint stock commercial banks (JSCBs), and rural credit cooperatives (RCCs). Economic analyses have especially focused on the development of bank efficiency and profitability over time. The equally important question, which of China’s banking institutions promote economic growth, has not been explored using macroeconomic data. Our study uses a novel data set covering the period 1997 to 2008 and employ Granger causality tests to estimate the finance-growth nexus of each of these bank types. Our results show that SOCBs and RCCs do not Granger-cause GDP growth and that SOCBs even have a negative effect on... (More)
China’s banking sector is dominated by four distinct organizational forms: policy banks (PBs), state-owned commercial banks (SOCBs), joint stock commercial banks (JSCBs), and rural credit cooperatives (RCCs). Economic analyses have especially focused on the development of bank efficiency and profitability over time. The equally important question, which of China’s banking institutions promote economic growth, has not been explored using macroeconomic data. Our study uses a novel data set covering the period 1997 to 2008 and employ Granger causality tests to estimate the finance-growth nexus of each of these bank types. Our results show that SOCBs and RCCs do not Granger-cause GDP growth and that SOCBs even have a negative effect on manufacturing growth. By contrast, PBs and JSCBs promote economic growth. (Less)
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
China, Economic growth, Government-owned banks, Banking sector
in
Empirical Economics
volume
51
issue
3
pages
897 - 920
publisher
Physica Verlag
external identifiers
  • scopus:84954311379
  • wos:000385171800002
ISSN
0377-7332
DOI
10.1007/s00181-015-1034-8
language
English
LU publication?
yes
id
f58a3214-d604-4e98-83ef-6ba091f09f89 (old id 8258147)
date added to LUP
2015-12-03 15:02:21
date last changed
2017-09-18 11:28:41
@article{f58a3214-d604-4e98-83ef-6ba091f09f89,
  abstract     = {China’s banking sector is dominated by four distinct organizational forms: policy banks (PBs), state-owned commercial banks (SOCBs), joint stock commercial banks (JSCBs), and rural credit cooperatives (RCCs). Economic analyses have especially focused on the development of bank efficiency and profitability over time. The equally important question, which of China’s banking institutions promote economic growth, has not been explored using macroeconomic data. Our study uses a novel data set covering the period 1997 to 2008 and employ Granger causality tests to estimate the finance-growth nexus of each of these bank types. Our results show that SOCBs and RCCs do not Granger-cause GDP growth and that SOCBs even have a negative effect on manufacturing growth. By contrast, PBs and JSCBs promote economic growth.},
  author       = {Andersson, Fredrik N G and Burzynska, Katarzyna and Opper, Sonja},
  issn         = {0377-7332},
  keyword      = {China,Economic growth,Government-owned banks,Banking sector},
  language     = {eng},
  number       = {3},
  pages        = {897--920},
  publisher    = {Physica Verlag},
  series       = {Empirical Economics},
  title        = {Lending for Growth? A Granger Causality Analysis of China's Finance-Growth Nexus},
  url          = {http://dx.doi.org/10.1007/s00181-015-1034-8},
  volume       = {51},
  year         = {2016},
}