The elusive capital

Collecting savings and making them available to entrepreneurs in the form of long-term capital is traditionally the task of banks. What credit institutions facilitated the collection of capital in China? How did it circulate? Where were capital markets developing credit instruments, allowing a wide exchange of information and the diffusion of financial innovations? If very few of the Chinese financial institutions that handled these operations was like a bank, in the sense of the term as used in the Middle Ages in Europe, did they nevertheless fulfil, its functions, even partially? Chapter 8 focuses on the analysis of China's financial institutions and raises the issue of capital sterilization, due to the fragmentation of financial institutions and high interest rates. It also examines the extent to which corruption and the social obligations of the rich contribute to the inability to accumulate and to capital destruction.