IDEAS home Printed from https://ideas.repec.org/a/now/fntfin/0500000029.html
   My bibliography  Save this article

China's Financial System: Growth and Risk

Author

Listed:
  • Allen, Franklin
  • Qian, Jun QJ
  • Gu, Xian

Abstract

We provide an updated and comprehensive review of China's financial system and explore the possible challenges in the future. First, China's financial system has been dominated by a large banking sector, which has played an important role in financing the real economy in the past decades. With the interest rate liberalization, the profitability of banks will go down and the competition in the banking sector will become stronger in the future. Moreover, this sector still needs to meet the challenge to reduce the amount of nonperforming loans. Second, the role of the stock market in allocating resources in the economy has been limited and ineffective. However, with the rapid growth of the markets and the introduction of more financial products, financial markets are expected to play a more important role in the economy going forward. Third, a nonstandard sector that consists of alternative financing channels is the most successful part of the financial system in terms of supporting the growth in the past decades. The co-existence of this sector with banks and markets can continue to support the growth of private and local government firms. Finally, in order to sustain the economic growth in China, policies need to reduce the likelihood of 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.

Suggested Citation

  • Allen, Franklin & Qian, Jun QJ & Gu, Xian, 2015. "China's Financial System: Growth and Risk," Foundations and Trends(R) in Finance, now publishers, vol. 9(3-4), pages 197-319, December.
    • Handle: RePEc:now:fntfin:0500000029
    DOI: 10.1561/0500000029
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1561/0500000029
    Download Restriction: no
    File URL: https://libkey.io/10.1561/0500000029?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:unt:esctis:tis19 is not listed on IDEAS
    2. repec:unt:esctis:tis17 is not listed on IDEAS
    3. Ge, Suqin & Yang, Dennis Tao & Zhang, Junsen, 2018. "Population policies, demographic structural changes, and the Chinese household saving puzzle," European Economic Review, Elsevier, vol. 101(C), pages 181-209.
    4. Morck, Randall & Yeung, Bernard, 2016. "China in Asia," China Economic Review, Elsevier, vol. 40(C), pages 297-308.
    5. Xiang, Junyi & Zhu, Ling & Kong, Dongmin, 2023. "Labor cost and corporate tax avoidance," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 338-358.
    6. Niu, Ruiyang & Chen, Lin & Jin, Liang & Xie, Guanghua & Zhao, Longfeng, 2024. "Does managerial bank relationship network matter corporate resilience? Evidence from the COVID-19 crisis," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 855-877.
    7. Allen, Franklin & Gu, Xian & Li, C. Wei & Qian, Jun “QJ” & Qian, Yiming, 2023. "Implicit guarantees and the rise of shadow banking: The case of trust products," Journal of Financial Economics, Elsevier, vol. 149(2), pages 115-141.
    8. Kong, Dongmin & Ma, Guangyuan & Qin, Ni, 2022. "The political economy of firm emissions: Evidence from a quasi-natural experiment in China," European Journal of Political Economy, Elsevier, vol. 75(C).
    9. repec:unt:esctis:tis18 is not listed on IDEAS

    More about this item

    Keywords

    Banks; Non-performing loans; Markets; Hybrid sector; Financial crisis;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • K0 - Law and Economics - - General
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:now:fntfin:0500000029. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lucy Wiseman (email available below). General contact details of provider: http://www.nowpublishers.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.