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Linkages and Structural Changes in the Chinese Financial Sector, 1996–2018: A Network and Input–Output Approach

Author

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  • Khan, Jamal
  • Li, Yuan
  • Mahsud, Qaiser Jamal

Abstract

This study examines the intersectoral linkages and evolving role of the Chinese financial sector in the economic network, with a variety of network analysis metrics, and structural changes to its intersectoral structural feedback relationship, with the Causative matrix. Our analysis yields four main results. First, Chinese financial sector (with greater downstream network closeness than upstream closeness) drives growth in its downstream sectors and has significant supply-side effects in economy. Second, the financial sector serves as an important network intermediary, facilitating transactions and interactions among various economic sectors. Third, the more externalized (pre-Global Financial Crisis) financial sector, which received significant feedback from other sectors’ final demand, became more internalized after the crisis. Finally, the financial sector is becoming less tightly linked to other sectors, with heterogeneous resource consumption and production distribution, and vulnerability to systemic risks. Policy integration of intersectoral linkages and financial leverage can promote economic growth and manage systemic risks.

Suggested Citation

  • Khan, Jamal & Li, Yuan & Mahsud, Qaiser Jamal, 2024. "Linkages and Structural Changes in the Chinese Financial Sector, 1996–2018: A Network and Input–Output Approach," Structural Change and Economic Dynamics, Elsevier, vol. 70(C), pages 33-44.
    • Handle: RePEc:eee:streco:v:70:y:2024:i:c:p:33-44
    DOI: 10.1016/j.strueco.2023.12.017
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