62 Pages Posted: 2 Aug 2005 Last revised: 5 Dec 2011
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.
Keywords: China, law and finance, economic growth, private sector, corporate governance, reputation and relationships
JEL Classification: O50, K00, G34
Suggested Citation: Suggested Citation
Allen, Franklin and Qian, Jun and Qian, Meijun, Law, Finance, and Economic Growth in China. Journal of Financial Economics, Vol. 77, No. 1, pp. 57-116, July 2005. Available at SSRN: https://ssrn.com/abstract=768704