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Are Chinese State-owned Bank Loans Growth-promoting? A Sectoral Analysis

Forcino, Rachel LU (2011) EKHR31 20111
Department of Economic History
Abstract
Given the unique development of China’s financial sector, the country provides an interesting basis for study of the relationship between bank-based finance and growth. In its sectoral analysis of the relationship between state-owned bank lending and GDP growth, the paper provides evidence of a positive and statistically significant relationship between state-owned bank credit and GDP between 1978 and 2005 in those sectors that receive large quantities of credit funds from state-owned banks. Also based on evidence from those sectors with large accumulations of credit funds from state-owned banks, the study supports a finance-led growth hypothesis based on the results of Granger causality testing. Finally, the study establishes evidence for... (More)
Given the unique development of China’s financial sector, the country provides an interesting basis for study of the relationship between bank-based finance and growth. In its sectoral analysis of the relationship between state-owned bank lending and GDP growth, the paper provides evidence of a positive and statistically significant relationship between state-owned bank credit and GDP between 1978 and 2005 in those sectors that receive large quantities of credit funds from state-owned banks. Also based on evidence from those sectors with large accumulations of credit funds from state-owned banks, the study supports a finance-led growth hypothesis based on the results of Granger causality testing. Finally, the study establishes evidence for a stronger link between state-owned bank credit and GDP following the 1995 Commercial Bank Law, indicating that China’s bank reform effort was effective in improving the efficiency of its financial sector. (Less)
Please use this url to cite or link to this publication:
author
Forcino, Rachel LU
supervisor
organization
course
EKHR31 20111
year
type
H1 - Master's Degree (One Year)
subject
keywords
China, state-owned commercial bank, finance, economic growth
language
English
id
1981595
date added to LUP
2011-07-07 10:41:53
date last changed
2011-07-07 10:41:53
@misc{1981595,
  abstract     = {Given the unique development of China’s financial sector, the country provides an interesting basis for study of the relationship between bank-based finance and growth. In its sectoral analysis of the relationship between state-owned bank lending and GDP growth, the paper provides evidence of a positive and statistically significant relationship between state-owned bank credit and GDP between 1978 and 2005 in those sectors that receive large quantities of credit funds from state-owned banks. Also based on evidence from those sectors with large accumulations of credit funds from state-owned banks, the study supports a finance-led growth hypothesis based on the results of Granger causality testing. Finally, the study establishes evidence for a stronger link between state-owned bank credit and GDP following the 1995 Commercial Bank Law, indicating that China’s bank reform effort was effective in improving the efficiency of its financial sector.},
  author       = {Forcino, Rachel},
  keyword      = {China,state-owned commercial bank,finance,economic growth},
  language     = {eng},
  note         = {Student Paper},
  title        = {Are Chinese State-owned Bank Loans Growth-promoting? A Sectoral Analysis},
  year         = {2011},
}