Advertisement

A Bank-Dominated Financial System

  • Michael BeggsEmail author
  • Luke Deer
Chapter
  • 132 Downloads

Abstract

This chapter sets the scene for the rest of the book by describing the structure of China’s bank-dominated financial system in the 2000s. We focus on six key features: (1) Banks were by far the dominant source of external finance for firms and households. (2) Bank deposits made up most of the financial assets held by households—not just of liquid assets, but of all financial assets. (3) For households, shares were the main alternative financial asset. (4) Non-financial firms accumulated deposits in amounts comparable to households. (5) The banking system was highly concentrated. (6) An interbank market, fostered by authorities, bridged deposit-loan imbalances, and helped banks to manage liquidity.

Keywords

Monetary policy China Banking Interbank market Finance 

References

  1. Bell, Stephen, and Hui Feng. 2013. The rise of the People’s Bank of China: The politics of institutional change. Cambridge, MA: Harvard University Press.CrossRefGoogle Scholar
  2. Cao, Honghui, and Mengmeng Ma. 2007. “The stock exchange market.” In Yang Li (ed.). China’s banking & financial markets: The internal research report of the Chinese government, pp. 223–248. Singapore: Wiley.Google Scholar
  3. Cao, Yujin, Jidong Chen, and Qinghua Zhang. 2018. “Housing investment in Urban China.” Journal of Comparative Economics 46, pp. 212–247.CrossRefGoogle Scholar
  4. Gao, Zhanjun. 2007. “The inter-bank bond market.” In Yang Li (ed.). China’s banking & financial markets: The internal research report of the Chinese government, pp. 191–222. Singapore: Wiley.Google Scholar
  5. Geiger, Michael. 2010. Monetary policy in China: Institutions, targets, instruments and strategies. Dissertation, Bayerischen Julius-Maximillians-Universistat Wurzburg.Google Scholar
  6. Glaeser, Edward, Wei Huang, Yueran Ma, and Andrei Shleifer. 2017. “A real estate boom with Chinese characteristics.” Journal of Economic Perspectives 31 (1), pp. 93–116.CrossRefGoogle Scholar
  7. Guo, Xiaoting. 2007. “The securities industry.” In Yang Li (ed.). China’s banking & financial markets: The internal research report of the Chinese government, pp. 133–158. Singapore: Wiley.Google Scholar
  8. Li, Yang, and Xingyun Peng. 2002. “The money market in China: Theory and practice.” China & World Economy 3, pp. 3–10.Google Scholar
  9. OECD. 2019. “Household financial assets (indicator).” Available at https://doi.org/10.1787/7519b9dc-en. 3 April 2019.
  10. People’s Bank of China. 2011. Monetary Policy Report, Quarter 1. Beijing: People’s Bank of China.Google Scholar
  11. People’s Bank of China. 2015. Monetary Policy Report, Quarter 3. Beijing: People’s Bank of China.Google Scholar
  12. Tsai, Kellee S. 2002. Back-Alley banking: Private entrepreneurs in China. Ithaca, NY: Cornell University Press.Google Scholar
  13. Walter, Carl E., and Fraser J. T. Howie. 2012. Red capitalism: The fragile financial foundation of China’s extraordinary rise, 2nd ed. Singapore: Wiley.Google Scholar
  14. Yin, Jianfeng. 2007. “The banking industry.” In Yang Li (ed.). China’s banking & financial markets: The internal research report of the Chinese government, pp. 161–190. Singapore: Wiley.Google Scholar
  15. Zeng, Gang. 2007. “The banking industry.” In Yang Li (ed.). China’s banking & financial markets: The internal research report of the Chinese government, pp. 69–95. Singapore: Wiley.Google Scholar

Copyright information

© The Author(s) 2019

Authors and Affiliations

  1. 1.Political EconomyUniversity of SydneySydneyAustralia
  2. 2.FinanceUniversity of SydneySydneyAustralia

Personalised recommendations