Bank fund reallocation and economic growth: Evidence from China

Chang, Philip; Jia, Chunxin; Wang, Zhicheng

doi:10.1016/j.jbankfin.2010.05.015

Cited by 59 publications

(24 citation statements)

References 43 publications

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“…Chang, Jia and Wang (2010) [37] examine bank fund reallocation and regional economic growth based on 1991-2005 provincial-level data of four state-owned commercial banks of China. They found no correlation at the regional level between fund reallocation and bank loans on the one hand and economic growth on the other.…”

Section: Empirical Literaturementioning

confidence: 99%

Nexus between Bank Credit and Economic Growth in Nigeria: Evidence from VEC Model

Balago¹

2014

OALib

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The study examines the relationship between bank credit and economic growth in Nigeria by considering the total bank credit extended to the production sector (which comprises manufacturing, agriculture, fishery and forestry, mining and quarrying, real estate and construction), general commerce sector (comprising: bills discounted, domestic trade, exports and imports) and services sector (comprising: public utilities, transport and communication, credit to financial institutions). Time series data from 1983-2012 were fitted into the regression equation using various econometric techniques such as stationarity test using Augmented Dickey Fuller (ADF) and Johansen Multivariate Co-Integration Test. Ordinary Least Square Regression (OLS) and VEC Models were used to analyse the relationship between the independent variables (total credits to production, general commerce and services sectors) and dependent variable (real gross domestic product). The result of the OLS shows that total bank credit to production, general commerce and services sectors has a positive relationship with the gross domestic product. Similarly, the VEC model result shows that causality runs from bank credit to the GDP. This result is consistent with a number of earlier studies reviewed in the literature that find causality running from bank credit to gross domestic product.

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Section: Empirical Literaturementioning

confidence: 99%

Nexus between Bank Credit and Economic Growth in Nigeria: Evidence from VEC Model

Balago¹

2014

OALib

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“…Rajan and Zingales () show that improvement in the quality of intermediation enhances factor productivity and in so doing helps explain economic growth differentials across nations. Recently, Chang et al (), Zhang et al () and Kendall () employed the credit/GDP ratio and the deposits/GDP ratio as proxies for the depth of financial development and found that financial development is positively associated with economic growth. Rioja and Valev () found that financial development plays a larger positive role in areas with an intermediate level of economic development but a smaller role in areas with a high level of economic development.…”

Section: Literature Reviewmentioning

confidence: 99%

Recovery from the Asian financial crisis: the importance of non‐monetary financial factors

Xue¹,

Taylor

2018

Asian-Pac Economic Lit

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While it is widely accepted that monetary factors play an integral role in macroeconomic outcomes, Bernanke's (1983) seminal paper highlights the significant role that non-monetary financial factors played in the downturn and recovery (or lack thereof ) from the Great Depression of the 1930s in the USA. This paper explores whether Bernanke's findings can be applied to the recovery from the East Asian financial crisis of 1997-98. We show that non-monetary financial factors played an important role in how quickly East Asian nations recovered in the years following 1998. Unlike the US experience during the Great Depression, East Asian nations generally implemented positive non-monetary financial reforms that helped speed recovery. We find that factors correlated with a healthy banking system had a significant, positive effect upon economic growth from 1999 to 2006 and that bank system health was particularly important in those East Asian countries that had traditionally weaker banking systems. Our findings suggest that the reform of financial institutions-such as strengthening financial sector supervision and implementing prudent regulations-should be given more attention when policies are devised to help economies recover from financial crises.

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“…This is corroborated by Lin and Zhang (), who document that the Big Four banks are less profitable and less efficient than other types of banks in China. Chang, Jia, and Wang () examine the effects of bank fund reallocation on regional economic growth in China from 1991 to 2005. They fail to find any correlation between either bank fund reallocation or bank loans and regional economic growth, which suggests that the lending decisions of Chinese banks are largely policy‐driven rather than market‐oriented.…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

Does political pressure matter in bank lending? Evidence from China

Cai

Xu²,

Zeng

2017

Financial Market

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Using provincial data from China between 2002 and 2011, we find substantial evidence indicating a positive association between the growth of bank loans issued by commercial banks and the political pressures faced by provincial leaders. This association is particularly true for state‐owned banks, which are much more politically pressurized than others, but is relatively attenuated in provinces with a more developed banking sector. We also find that bank loans issued under greater political pressures are less commercially oriented and have lower quality. Our findings are robust to a variety of sensitivity analyses and alternative measures of political pressure. Overall, our study contribute to a growing literature emphasizing the role of the political incentives of government officials in fuelling economic growth through credit allocation.

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Bank fund reallocation and economic growth: Evidence from China

Cited by 59 publications

References 43 publications

Nexus between Bank Credit and Economic Growth in Nigeria: Evidence from VEC Model

Nexus between Bank Credit and Economic Growth in Nigeria: Evidence from VEC Model

Recovery from the Asian financial crisis: the importance of non‐monetary financial factors

Does political pressure matter in bank lending? Evidence from China

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