Law, Finance, and Economic Growth in China
University of Pennsylvania - Finance Department; European Corporate Governance Institute (ECGI)
China Academy of Financial Research (CAFR); Boston College - Finance Department; University of Pennsylvania - Wharton Financial Institutions Center
National University of Singapore
Journal of Financial Economics, Vol. 77, No. 1, pp. 57-116, July 2005
China is an important counterexample to the findings in the law, institutions, finance, and growth literature: Neither its legal nor financial system is well developed, yet it has one of the fastest growing economies. While the law-finance-growth nexus applies to the State Sector and the Listed Sector, with arguably poorer applicable legal and financial mechanisms, the Private Sector grows much faster than the others and provides most of the economy's growth. The imbalance among the three sectors suggests that alternative financing channels and governance mechanisms, such as those based on reputation and relationships, support the growth of the Private Sector.
Number of Pages in PDF File: 62
Keywords: China, law and finance, economic growth, private sector, corporate governance, reputation and relationships
JEL Classification: O50, K00, G34Accepted Paper Series
Date posted: August 2, 2005 ; Last revised: December 5, 2011
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