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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Bibliographic Details
Main Author: Wei, Shang-Jin
Other Authors: Boyreau-Debray, Genevieve
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2004
Series:IMF Working Papers
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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653 |a International finance 
653 |a Credit 
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653 |a Finance 
653 |a Monetary economics 
653 |a Capital markets 
653 |a Saving 
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653 |a Monetary Policy, Central Banking, and the Supply of Money and Credit: General 
653 |a Long-term Capital Movements 
653 |a Exports and Imports 
653 |a General Financial Markets: General (includes Measurement and Data) 
653 |a International economics 
653 |a Financial integration 
653 |a Consumption; Economics 
653 |a Capital inflows 
653 |a Consumption 
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653 |a Capital movements 
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520 |a 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