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How Much Has Private Credit Lending Reacted to Monetary Policy in China? The Case of Wenzhou

Author

Listed:
  • Duo Qin

    (Department of Economics, SOAS University of London, UK)

  • Zhong Xu

    (People's Bank of China)

  • Xue-Chun Zhang

    (People's Bank of China)

Abstract

This study investigates empirically what the major factors are which have driven Wenzhou’s informal credit market and how much that market is responsive to monetary policies and the formal banking conditions nationwide. The main findings are: (i) the informal credit lending rates are highly receptive to monetary policies; (ii) the market is dominantly demand driven; (iii) the informal lending is substitutive to bank savings in the short run but complementary to banking lending in the long run; and (iv) the market is complementary to excessive investments in the local real estate market.

Suggested Citation

  • Duo Qin & Zhong Xu & Xue-Chun Zhang, 2013. "How Much Has Private Credit Lending Reacted to Monetary Policy in China? The Case of Wenzhou," Working Papers 178, Department of Economics, SOAS University of London, UK.
    • Handle: RePEc:soa:wpaper:178
    as

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    File URL: https://www.soas.ac.uk/sites/default/files/2022-10/economics-wp178.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Dong He & Honglin Wang & Xiangrong Yu, 2015. "Interest Rate Determination in China: Past, Present, and Future," International Journal of Central Banking, International Journal of Central Banking, vol. 11(4), pages 255-277, December.

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    More about this item

    Keywords

    informal credit market; monetary policy;

    JEL classification:

    • G19 - Financial Economics - - General Financial Markets - - - Other
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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