Financial Governance and Economic Development: Making Sense of the Chinese Experience

PSL Quarterly Review, Vol. 64, No. 258, pp. 267-286, 2011

20 Pages Posted: 4 Oct 2011

See all articles by Dic Lo

Dic Lo

University of London

Yingquan Jiang

affiliation not provided to SSRN

Guicai Li

affiliation not provided to SSRN

Date Written: October 4, 2011

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.

Keywords: Chinese banks, market reforms, economic development

JEL Classification: G21, N65, O16

Suggested Citation

Lo, Dic and Jiang, Yingquan and Li, Guicai, Financial Governance and Economic Development: Making Sense of the Chinese Experience (October 4, 2011). PSL Quarterly Review, Vol. 64, No. 258, pp. 267-286, 2011, Available at SSRN: https://ssrn.com/abstract=1938163

Dic Lo (Contact Author)

University of London ( email )

Senate House
Malet Street
London, WC1E 7HU
United Kingdom

Yingquan Jiang

affiliation not provided to SSRN

Guicai Li

affiliation not provided to SSRN

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