Could Financial Distortions Be No Impediment to Economic Gowth after All? Evidence from China

GEP Research Paper No. 2006/36

57 Pages Posted: 20 Nov 2006

See all articles by Alessandra Guariglia

Alessandra Guariglia

Durham University - Durham Business School

Sandra Poncet

Université Paris I Panthéon-Sorbonne - TEAM; Université Paris I Panthéon-Sorbonne; Centre d'Etudes Prospectives et d'Info. Internationales (CEPII)

Date Written: 2006

Abstract

Using data for 30 Chinese provinces over the period 1989-2003, this study examines the relationship between finance, and real GDP, capital, and total factor productivity growth. We find that traditionally used indicators of financial development and China-specific indicators measuring the level of state interventionism in finance are generally negatively associated with growth and its sources, while indicators measuring the degree of market driven financing in the economy are positively associated with them. These effects have been gradually declining over time, and are weaker for high FDI recipients, suggesting that FDI may be used to alleviate the costs associated with the inefficient banking sector.

Keywords: Financial development, Financial distortions, Economic growth, Capital accumulation, Productivity growth, China

JEL Classification: E44, G21, N15, O16, O40

Suggested Citation

Guariglia, Alessandra and Poncet, Sandra and Poncet, Sandra, Could Financial Distortions Be No Impediment to Economic Gowth after All? Evidence from China (2006). GEP Research Paper No. 2006/36, Available at SSRN: https://ssrn.com/abstract=945599 or http://dx.doi.org/10.2139/ssrn.945599

Alessandra Guariglia (Contact Author)

Durham University - Durham Business School ( email )

Durham Business School
Mill Hill Lane
Durham, DH1 3LB
United Kingdom

Sandra Poncet

Université Paris I Panthéon-Sorbonne - TEAM ( email )

106-112 boulevard de l'hôpital
Cedex 13 Paris, P75647
France

HOME PAGE: http://team.univ-paris1.fr/teamperso/sponcet/

Université Paris I Panthéon-Sorbonne ( email )

12, place du Panthéon
Paris, IL
France

Centre d'Etudes Prospectives et d'Info. Internationales (CEPII) ( email )

9 Rue Georges Pitard
Paris Cedex 15, F-75015
France

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