China’s Financial System: Opportunities and Challenges
83 Pages Posted: 17 Oct 2011
There are 2 versions of this paper
China’s Financial System: Opportunities and Challenges
China's Financial System: Opportunities and Challenges
Date Written: October 15, 2011
Abstract
We provide a comprehensive review of China’s financial system, and explore directions of future development. First, the financial system has been dominated by a large banking sector. In recent years banks have made considerable progress in reducing the amount of non-performing loans and improving their efficiency. It is important that these efforts are continued. Second, the role of the stock market in allocating resources in the economy has been limited and ineffective. Further development of China’s stock market and other financial markets is the most important task. Third, the most successful part of the financial system, in terms of supporting the growth of the overall economy, is a non-standard sector that consists of alternative financing channels, governance mechanisms, and institutions. This sector should co-exist with banks and markets in the future in order to continue to support the growth of the Hybrid Sector (non-state, non-listed firms). Finally, in order to sustain stable economic growth, China should aim to prevent and halt damaging financial crises, including a banking sector crisis, a real estate or stock market crash, and a “twin crisis” in the currency market and banking sector.
Keywords: banks, non-performing loans, markets, hybrid sector, financial crisis
JEL Classification: O5, K0, G2
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
China's Financial System: Past, Present, and Future
By Franklin Allen, Jun "qj" Qian, ...
-
By Sugato Chakravarty, Asani Sarkar, ...
-
Puzzles in the Chinese Stock Market
By John G. Fernald and John H. Rogers
-
Speculative Trading and Stock Prices: An Analysis of Chinese A-B Share Premia
By Jianping Mei, José A. Scheinkman, ...
-
Information Asymmetry and Asset Prices: Evidence from the China Foreign Share Discount
By Kalok Chan, Albert J. Menkveld, ...
-
Government as a Discriminating Monopolist in the Financial Market: the Case of China
By Roger H. Gordon and Wei Li
-
Government as a Discriminating Monopolist in the Financial Market: The Case of China
By Roger H. Gordon and Wei Li
-
By Kalok Chan, Albert J. Menkveld, ...
-
A Resolution of the Chinese Discount Puzzle
By George Andrew Karolyi and Lianfa Li
-
Location of Trade, Ownership Restrictions, and Market Illiquidity: Examining Chinese A- and H-Shares
By Steven Shuye Wang and Li Jiang