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1 Financial development and economic growth: Current issues of theory and practice of research  / 2024 /  Voprosy Ekonomiki no.12, pp.29 / 

10.32609/0042-8736-2024-12-29-49
2 Digital Finance and Corporate Cash-Holding Strategy: Organizational Heterogeneity and Strategic Transmission Channels  / 2023 /  Sustainability  / vol.15, no.3, pp.2361 / 

10.3390/su15032361

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East Asian Economic Review Vol. 10, No. 1, 2006. pp. 161-184.

DOI https://dx.doi.org/10.11644/KIEP.JEAI.2006.10.1.155

Number of citation : 2

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Finance and Economic Development in China

Author

Wonho Song

Korea Institute for International Economic Policy (KIEP)

whsong@kiep.go.kr

Yunjong Wang

SK Research Institute for SUPEX Management

yjwang@sktelecom.com
Creative Commons Attribution License

EAER is an open access journal distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license.

Abstract

This paper focuses on the following two issues. First, the paper investigates the extent to which financial development has contributed to economic growth in China. For this purpose, we utilize well-known financial development indicators and seek to find a long-run relationship between output growth and financial development. Second, the effects of financial repression on economic growth are examined. A financial repression index is constructed based on three related measures, and this index is augmented to the growth-finance equation. Empirical results show that, three financial development indicators, Liquid Liabilities, Domestic Credit and Non-Policy Loan, have stable positive long-run relationships with output growth. It is also found that output growth is weakly exogenous with respect to financial development, whereas financial development is not with respect to output growth. As for the financial repression, it turns out to have affected output growth negatively during the sample period. Unlike financial development indicators, financial repression index is found to be weakly exogenous.

JEL classification: E44, G1, G18, O53

Keywords

China, Growth, Financial Development, Financial RepreChina, Growth, Financial Development, Financial Repression

Language

English

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