Growth-Financial Intermediation Nexus in China

IMF Working Paper No. 02/194

Posted: 28 Feb 2003

See all articles by Jahangir Aziz

Jahangir Aziz

International Monetary Fund (IMF) - Asia and Pacific Department

Christoph K. Duenwald

International Monetary Fund (IMF)

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Abstract

This paper studies the relationship between economic growth and financial development in China during the post-1978 reform period. Recent studies, based on cross-country data, have found a positive association between these two variables. We find that while a positive correlation between growth and financial intermediation exists in China, the association is more apparent than real. The nonstate sector, which contributed most to China's remarkable growth during this period, did not use the domestic financial system in any substantial way for financing. The same appears to be true for the faster-growing provinces. Compared to foreign investment, domestic private credit played a relatively small, although statistically significant, role in financing the nonstate sector and fast-growing provinces.

JEL Classification: N1, O5

Suggested Citation

Aziz, Jahangir and Duenwald, Christoph K., Growth-Financial Intermediation Nexus in China. IMF Working Paper No. 02/194, Available at SSRN: https://ssrn.com/abstract=383960

Jahangir Aziz (Contact Author)

International Monetary Fund (IMF) - Asia and Pacific Department ( email )

700 19th Street NW
Washington, DC 20431
United States

Christoph K. Duenwald

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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