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Bank fund reallocation and economic growth: Evidence from China

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  • Chang, Philip C.
  • Jia, Chunxin
  • Wang, Zhicheng

Abstract

This paper examines bank fund reallocation and regional economic growth based on 1991-2005 provincial-level data of four state-owned commercial banks of China that practice fund reallocation nation-wide. We find no correlation between bank fund reallocation and regional economic growth or between bank loans and regional economic growth. We find, however, a positive association between bank deposits and growth. It appears economic growth leads financial development in China, not the other way around. Furthermore, as China's market-oriented reforms deepen, fund reallocation and loans start to manifest positive effects on growth even though the banks are government owned.

Suggested Citation

  • Chang, Philip C. & Jia, Chunxin & Wang, Zhicheng, 2010. "Bank fund reallocation and economic growth: Evidence from China," Journal of Banking & Finance, Elsevier, vol. 34(11), pages 2753-2766, November.
    • Handle: RePEc:eee:jbfina:v:34:y:2010:i:11:p:2753-2766
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