Financial system reform and economic growth in a transition economy: The case of China, 1978-2004

J. Peng, Nicolaas Groenewold, X. Fan, G. Li

Research output: Contribution to journalArticle

8 Citations (Scopus)

Abstract

We examine the relationship between financial system reform and growth using data for China, which has undergone extensive financial liberalization since 1978. We construct an index of financial liberalization by combining the "Delphi method" and principal components analysis to combine eight aspects of the reform process for 1978 to 2004 and address the finance-growth nexus within a vector autoregressive model of growth, saving, and liberalization. We find robust evidence of significant positive effects of liberalization on growth in the short run and on accumulated growth in the long run but only weak effects on saving. Liberalization significantly causes both growth and saving, but there are no significant feedback effects to liberalization. © 2014 M.E. Sharpe, Inc.
Original languageEnglish
Pages (from-to)5-22
JournalEmerging Markets Finance and Trade
Volume50
Issue numberSUPPL. 2
DOIs
Publication statusPublished - 2014

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Economic growth
China
Transition economies
Financial system
Liberalization
Financial liberalization
Reform process
Principal component analysis
Delphi method
Feedback effect
Short-run
Finance
Vector autoregressive model

Cite this

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Financial system reform and economic growth in a transition economy: The case of China, 1978-2004. / Peng, J.; Groenewold, Nicolaas; Fan, X.; Li, G.

In: Emerging Markets Finance and Trade, Vol. 50, No. SUPPL. 2, 2014, p. 5-22.

Research output: Contribution to journalArticle

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