University of Pennsylvania
NBER Working Papers and Publications
|November 2012||China's Financial System: Opportunities and Challenges|
with Franklin Allen, Jun , Mengxin Zhao
in Capitalizing China, Joseph Fan and Randall Morck, editors
This chapter chronicles the development of China's financial system and compares it with those of other countries. Four main conclusions are drawn about the financial system and its future development. First, the large banking sector dominated by state-owned banks has played a bigger role in funding the growth of many types of firms than financial markets. Second, the stock market has been growing fast since 1990, but has played a relatively limited role in supporting economic growth. Third, alternative financing channels have supported the growth of the Hybrid Sector, which contributes most of the economic growth compared to the State and Listed Sectors. Finally, a significant challenge for China's financial system is to avoid damaging financial crises that can severely disrupt the econom...
|February 2012||China's Financial System: Opportunities and Challenges|
with Franklin Allen, Jun "QJ" Qian, Mengxin Zhao: w17828
We provide a comprehensive review of China's financial system, and explore directions of future development. First, the financial system has been dominated by a large banking sector. In recent years banks have made considerable progress in reducing the amount of non-performing loans and improving their efficiency. Second, the role of the stock market in allocating resources in the economy has been limited and ineffective. We discuss issues related to the further development of China's stock market and other financial markets. Third, the most successful part of the financial system, in terms of supporting the growth of the overall economy, is a non-standard sector that consists of alternative financing channels, governance mechanisms, and institutions. The co-existence of this sector with b...