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    Credit growth in China: determinants and consequences

    Chen, Xiaohong (2020) Credit growth in China: determinants and consequences. Doctoral thesis, Birkbeck, University of London.

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    Abstract

    Since 1978, China saw rapid growth of both output and credit as it evolved from a centrally-planned, closed economy to a market-based open economy. This thesis provides an empirical analysis of the role of credit and money in China, within a standard theoretical framework, and examines the relative roles of state and market in their growth. This empirical analysis can contribute to the development of theoretical analysis and policy proposals but they are beyond the scope of this thesis. Chapter 1 introduces the thesis. Chapter 2 identifies credit cycles and show that Chinese credit booms clustered in between 1984-88, 1992-94, and 2009-11, around big political conferences. We also examine the role of monetary policies. This analysis suggests that Chinese credit cycles are partly state-driven. Chapter 3 conducts a heterogeneous panel analysis of loan growth for a panel of 14 Chinese listed banks, with data for 2008Q1-2018Q4. Loans are the major form of credit. These 14 banks represent a large share of total bank assets and we group them into various bank-clusters. The results suggest that, whilst there remains a large degree of state influence on Chinese banks, there is evidence for market exposure even at a time of unprecedented state interventions following the global financial crisis. Chapter 4 investigates money demand since credit expansion in China has been accompanied by monetary expansion. An unrestricted VAR suggests a regime shift in 1992 when Deng’s reforms deepened. A cointegrating VECM is estimated over 1980Q1-1992Q4 and (1993Q1-2018Q3). We find two cointegrating vectors determining money and income, showing an IS/LM relationship. The results provide evidence on China’s economic transition to a market-based system, based on stable money and goods market equilibria. The short-run adjustment equations can be given interpretations in terms of a Phillips Curve and a Taylor Rule. Chapter 5 concludes.

    Metadata

    Item Type: Thesis
    Additional Information: Date of PhD award confirmed as 2020 by registry
    Copyright Holders: The copyright of this thesis rests with the author, who asserts his/her right to be known as such according to the Copyright Designs and Patents Act 1988. No dealing with the thesis contrary to the copyright or moral rights of the author is permitted.
    Depositing User: Acquisitions And Metadata
    Date Deposited: 04 Feb 2020 15:43
    Last Modified: 14 Jun 2021 05:33
    URI: https://eprints.bbk.ac.uk/id/eprint/40463

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