In the early 1990s, the volume of loans in all Chinese financial institutions exceeded that of deposits, creating an LED margin. DEL margins have existed every year since. Enterprise deposits increase when banks grant a certain amount of loans and purchase a certain amount of gold, silver or foreign exchange. Banks purchase government bonds, augmenting fiscal deposits or public deposits.
Fiscal deposits become enterprise and institution deposits when they are allocated.
As enterprises, institutions and individuals withdraw cash, bank deposits decrease. Cash Thus the increase of gold, silver, foreign exchange and national bonds held by financial institutions shrinks the LED margin and expands the DEL margin, as does the increase in cash withdrawals. Meanwhile, an increase in cash supplies shrinks the DEL margin and expands the LED margin. From 1994 on, the LED margin shrank while the DEL margin expanded. This happened due to changes in the types of assets held by financial institutions and the increase of assets other than loans, which resulted from the development of an export-oriented economy and from macroeconomic measures.