Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

No 2013:19: Lending for Growth? An Analysis of State-Owned Banks in China

Fredrik N. G. Andersson (), Katarzyna Burzynska () and Sonja Opper ()
Additional contact information
Fredrik N. G. Andersson: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden
Katarzyna Burzynska: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden
Sonja Opper: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden

Abstract: This paper provides the first comparative analysis of different types of publicly owned banks operating in China between 1997 and 2008. Using principal component analysis and Granger-causality tests, this study shows that China’s state-owned commercial banks and rural credit cooperatives did not promote GDP growth during the observation period. State-owned commercial banks even had a negative effect on growth in the manufacturing sector. By contrast, state policy banks and joint stock commercial banks did promote domestic growth. China’s experience presents a more nuanced picture of state banking that goes beyond the role of ownership to consider functional and institutional differences.

Keywords: China; Banking sector; Economic growth

JEL-codes: G21; O16; P30

42 pages, June 17, 2013

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