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Financial governance and economic development: making sense of the Chinese experience

Author

Listed:
  • Dic Lo

    (School of Oriental and African Studies, University of London; Center of Research in Comparative Political Economy, Renmin University of China.)

  • Guicai Li

    (School of Economics, Jilin University of Economics and Finance, China.)

  • Yingquan Jiang

    (School of Oriental and African Studies, University of London.)

Abstract

Despite fundamental market reforms, the Chinese financial system has remained a mixed system. From the perspectives of the mainstream doctrines of financial liberalization, this system is easily judged to be entailing serious allocative inefficiencies. Nevertheless, from alternative theoretical perspectives, the system might have been conducive to promoting productive efficiency. This paper argues that the actual experience does seem to indicate that, hitherto, the gains in productive efficiency have more than compensated for the losses in allocative efficiency. This judgement helps to make sense of the Chinese anomaly that a seemingly inefficient financial system has co-existed with the outstanding performance of financial deepening and economic development over the past three decades.

Suggested Citation

  • Dic Lo & Guicai Li & Yingquan Jiang, 2011. "Financial governance and economic development: making sense of the Chinese experience," PSL Quarterly Review, Economia civile, vol. 64(258), pages 267-286.
  • Handle: RePEc:psl:pslqrr:2011:35
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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/9412/9307
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    References listed on IDEAS

    as
    1. James Laurenceson & Joseph C.H. Chai, 2003. "Financial Reform and Economic Development in China," Books, Edward Elgar Publishing, number 2714.
    2. Mr. Jahangir Aziz & Mr. Christoph Duenwald, 2002. "Growth-Financial Intermediation Nexus in China," IMF Working Papers 2002/194, International Monetary Fund.
    3. Dic Lo & Yu Zhang, 2011. "Making Sense of China’s Economic Transformation," Review of Radical Political Economics, Union for Radical Political Economics, vol. 43(1), pages 33-55, March.
    4. J. Kornai & E. Maskin & G. Roland, 2004. "Understanding the Soft Budget Constraint," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 11.
    5. Wojciech Charemza & Richard E. Quandt, 1982. "Models and Estimation of Disequilibrium for Centrally Planned Economies," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(1), pages 109-116.
    6. Portes, Richard, 1986. "The Theory and Measurement of Macroeconomic Disequilibrium in Centrally Planned Economies," CEPR Discussion Papers 91, C.E.P.R. Discussion Papers.
    7. Boyreau-Debray, Genevieve, 2003. "Financial intermediation and growth - Chinese style," Policy Research Working Paper Series 3027, The World Bank.
    8. Philip Arestis, 2004. "Washington consensus and financial liberalization," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 27(2), pages 251-271.
    9. Sebastian Dullien, 2009. "Central Banking, Financial Institutions And Credit Creation In Developing Countries," UNCTAD Discussion Papers 193, United Nations Conference on Trade and Development.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Nina Shapiro, 2012. "Josef Steindl: An Economist of His Times," Moneta e Credito, Economia civile, vol. 65(260), pages 293-315.
    2. Xiaosheng Ju & Dic Lo, 2012. "The cost and benefit of banking regulations and controls, Chinese style," PSL Quarterly Review, Economia civile, vol. 65(263), pages 385-402.
    3. Alessandro Roncaglia, 2011. "Introduction," PSL Quarterly Review, Economia civile, vol. 64(258), pages 189-191.

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    More about this item

    Keywords

    Chinese banks; market reforms; economic development;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • N65 - Economic History - - Manufacturing and Construction - - - Asia including Middle East
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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