Between mao and markets: New evidence on segmentation of the bank loan market in China

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

This article examines the local bank lending's dependency upon local deposits within China in the Feldstein-Horioka vein. In the case of a transition economy like China, it would be appropriate to assume the presence of a significant level of disparity in the cost of funds between State-Owned Enterprises (SOEs) and non-SOEs. For this purpose, a dataset of the provincial deposit rates and the provincial loan rates for the state and the nonstate sectors is built. Even after controlling the national- and province-specific shocks, the correlation between the local deposit rates and the local loan rates for the nonstate sector, in contrast with that for the state sector, is even higher than for the Organization for Economic Co-operation and Development (OECD) member countries. The findings suggest that serious asymmetric information problems between banks and non-SOEs might impede cross-regional lending and prevent the development of the nonstate sector within China.

Original languageEnglish
Pages (from-to)1213-1218
Number of pages6
JournalApplied Economics Letters
Volume17
Issue number12
DOIs
Publication statusPublished - Aug 2010
Externally publishedYes

Fingerprint

China
Segmentation
Bank loans
New markets
Loan rates
Deposit rate
Transition economies
Feldstein-Horioka
Asymmetric information
Co-development
Deposits
State-owned enterprises
Bank lending
Costs
Lending
Economic cooperation

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Between mao and markets : New evidence on segmentation of the bank loan market in China. / Ohkuma, Masanori.

In: Applied Economics Letters, Vol. 17, No. 12, 08.2010, p. 1213-1218.

Research output: Contribution to journalArticle

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