Journal of East China Normal University (Philosophy and Social Sciences) >

2006 , Vol. 38 >Issue 2: 102 - 107

DOI: https://doi.org/10.16382/j.cnki.1000-5579.2006.02.016

Chicken or Egg: Financial Development and Economic Growth in China, 1992—2004

  • Xue-jun FAN ,
  • Lensink Robert ,
  • Jacobs Jan
Expand
  • 1. School of Business, East China Normal University, Shanghai 200062, China
    2. Faculty of Economics, University of Groningen, The Netherland
    3. CCSO and Faculty of Economics, University of Groningen, The Netherlands

Received date: 2005-12-23

  Online published: 2006-03-30

Fold

Abstract

This paper contributes to the empirical finance-growth literature by examining the relationship between financial depth, banking sector development, stock market development and economic growth in China.We apply Granger (non-) causality tests and weakly exogeneity test for non-stationary variables to examine short-run and long-run causality between economic growth and financial development.We find positive relationships between financial depth, banking sector development and growth.And the influence of stock market development on GDP appear to be much stronger than that of the banking development in long-run.

Key words： Financial development; Economic growth; Granger (non-) causality tests; weakly exogeneity test

Cite this article

Xue-jun FAN , Lensink Robert , Jacobs Jan . Chicken or Egg: Financial Development and Economic Growth in China, 1992—2004[J]. Journal of East China Normal University (Philosophy and Social Sciences), 2006 , 38(2) : 102 -107 . DOI: 10.16382/j.cnki.1000-5579.2006.02.016

References

1 Schumpeter , Joseph A. . 1939, Business Cycles: A Theoretical, Historical, and Statistical Analysis of the Capitalist Process. New York: McGraw-Hill.
2 Gurley , John G. , Edward S.Shaw . , 1955, "Financial Aspects ofEconomic Development", American Economic Review, Vol.45 No.4, paper 515- 538.
3 Gurley , John G. , Edward S.Shaw . 1960, Money in a Theory ofFinance. Washington: DC: The Brookings Institution.
4 Goldsmith , Raymond . 1969, Financial Structure and Develop-ment. New Haven: CT: Yale University Press.
5 Greenwood , Jeremy , Boyan Jovanovic . , 1990, "Financial De-velopment, Growth and the Distribution of Income", Journa ofPolitical Econ-omy, Vol.98 No.5, paper 1076- 1107.
6 Bencivenga , Valerie R. , Bruce D.Smith . , 1991, "Financial In-termediation and Endogenous Growth", Review of Economic Studies, Vol.58, paper 195- 209.
7 Bencivenga , Valerie R. , Bruce D.Smith . , 1993, "Some Conse-quences of Credit Rationing in an Endogenous Growth Model", Journal ofEco-nomic Dynamics and Control, Vol.17 No.1-2,paper 97-122.
8 Obstfeld , Maurice . , 1994, "Risk-Taking, Global Diversificationand Growth", American Economic Review, Vol.84, paper 10- 29.
9 Saint -Paul , Gilles . , 1992, "Technological Choice, Financial Mar-kets and Economic Development", Europoean Economic Review, Vol.36 No.4,paper 763-781.
10 Atje , R. , B. Jovanovic . , 1993, "Stock Markets and Develop-ment", Europoean Economic Review, Vol.37, paper 632- 640.
11 Berthelemy, Jean-Claude and Aristomene Varoudakis, 1996, Financial Developemnt, Policy and Economic Growth, in Niels Hermes andRobert Lensink(eds), Financial Development and Economic Growth: Theo-ry and Experiences from Developing Countries, London: Routledge, 66-94.
12 King , Robert G. , Ross Levine . , 1993, "Finance, Entrepreneur-ship, and Growth: Theory and Evidence", Journal of Monetary Economics, Vol.32 No.3,paper 513-542.
13 King , Robert G. , Ross Levine . , 1993, "Finance and Growth: Schumpeter Might be Right", Quarterly Journal ofEconomics, Vol.108 No.3,paper 717-737.
14 King, Robert G. and Ross Levine, 1993, Financial Intermedi-ation and Economic Growth, in Colin Mayer and avier Vives(eds. ), Capi-tal Market and Financial Intermediation, Cambridge: Cambridge UniversityPress, 156-189.
15 Levine , Ross , Sarah Zervos . , 1998, "Stock Markets, Banks, and Economic Growth", American Economic Review, Vol.88, paper 537- 558.
16 Levine , Ross , N. Loyaza , T. Beck . , 2000, "Financial Inter-mediation and Growth: Causality and Causes", Journal of Monetary Econom-ics, Vol.46, paper 31- 71.
17 Beck , T. , Ross Levine , N. Loyaza . , 2000, "Finance and theSources of Growth", Journal of Financial Economics, Vol.58, paper 261- 300.
18 Patrick , H. T. . , 1996, "Financial Development and EconomicGrowth in Underdeveloped Countries", Economic Development and CulturalChange, Vol.14, paper 341- 392.
19 Saint-Paul, Gilles, 1996, Demand-driven Financial Develop-ment, in Niels Hermes and Robert Lensink(eds), Financial Developmentand Economic Growth: Theory and Experiences from Developing Countries, London: Routledge, 37-52.
20 Greenwood , Jeremy , Boyan Jovanovic . , 1990, "Financial De-velopment, Growth and the Distribution of Income", Journal of PoliticalEconomy, Vol.98, paper 1076- 1107.
21 Demetriades , P. , K. Hussein . , 1996, "Does Financial Develop-ment Cause Economic Growth?Time Series Evidence from 16 Countries", Journal of Development Economics, Vol.15, paper 387- 411.
22 Arestis , Philip , Panicos Demetriades . , 1997, "Financial Devel-opment and Economic Growth: Assessing the Evidence", Economic Journal, Vol.107, paper 783- 799.
23 Arestis , Philip , Panicos Demetriades , Kul B.Luintel . , 2001, "Financial Development and Economic Growth: The Role of Stock Markets", Journal of Money, Credit and Banking, Vol.33, paper 16- 41.
24 Arestis, Philip, Ambika D. Luintel and Kul B. Luintel, 2004, Does Financial Structure Matter?The Levy Economics Institute of Bard Col-lege, Working Paper No. 399.
25 Christopoulos , Dimitris K. , Efthymios G.Tsionas . , 2004, "Fi-nancial Development and Economic Growth, Evidence from Panel Unit Rootand Cointegration Tests", Journal of Development Economics, Vol.73, paper 55- 74.
26 Allen, Franklin, Jun Qian and Meijun Qian, 2002, Law, Fi-nance, and Economic Growth in China, Working Paper Series of the WhartonFinancial Institutions Center, 02-44.
27 Toda , H. Y , P.C.B. Phillips . , 1993, "Vector Autoregressionsand Causality", Econometrica, Vol.61, paper 1367- 1393.
28 Engle , Robert F. , Clive W.J. Granger . , 1987, "Co-in-tergration and Error Correction: Repressentation, Estimation, and Testing", Econometrica, Vol.55, paper 251- 276.
Options
Outlines

/

〈 〉