Can China Grow Faster? A Diagnosis of the Fragmentation of Its Domestic Capital Market

This paper examines possible segmentation of the internal capital market in China. We employ two standard tools from the international finance literature to analyze financial integration across Chinese provinces. Both tests confirm a similar (and somewhat surprising) picture: capital mobility within...

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Main Author: Wei, Shang-Jin
Other Authors: Boyreau-Debray, Genevieve
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2004, 2004
Series:IMF Working Papers; Working Paper
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Summary:This paper examines possible segmentation of the internal capital market in China. We employ two standard tools from the international finance literature to analyze financial integration across Chinese provinces. Both tests confirm a similar (and somewhat surprising) picture: capital mobility within China is low! Furthermore, the degree of internal financial integration appears to have decreased, rather than increased, in the 1990s relative to the preceding period. Finally, we document that the government tends to reallocate capital from more productive regions to less productive ones. In this sense, a smaller role of the government in the financial sector might increase the rate of economic growth
Physical Description:45 p.
ISBN:9781451849905
1451849907