Pitfalls of a state-dominated financial system
Subtitle: the case of China
By: Genevieve Boyreau-Debray, Shang-Jin Wei.
Contributors: Wei, Shang-Jin.; National Bureau of Economic Research.
Series: NBER working paper series -- no. 11214.; Working paper series (National Bureau of Economic Research) -- working paper no. 11214.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, Mass
Language: eng
Number of pages: 36
Subjects: Banks and banking -- Government ownership -- China; Finance -- China -- Econometric models
Description: "State-owned financial institutions have been proposed as a way to address market failure, but the recent literature has also highlighted their pathological problems.  This paper studies the case of China for pitfalls of a state-dominated financial system, including possible segmentation of the internal capital market due to local government interference and mis-allocation of capital.  Even without formal legal prohibition to capital movement across regions, we find that capital mobility within China is low.  Furthermore, to the extent some capital moves around the country, the government (as opposed to the private sector) tends to allocate capital systematically away from more productive regions toward less productive ones.  In this context, a smaller role of the government in the financial sector might increase economic efficiency and the rate of economic growth"--National Bureau of Economic Research web site.
Notes: "March 2005."

Includes bibliographical references (p. 33-36).

Also available in PDF from the NBER world wide web site (www.nber.org).