ECON 455 Lecture 16 Financial reforms

ECON 455 Lecture 16 Financial reforms - Econ455 Economic...

Info icon This preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
1 1 Econ455: Economic Development in China Lecture 16: March 14 Financial reforms: Will China have a Financial crisis? Sandra Poncet Lorch Hall, room 207 Email: [email protected] Office Hours: Mondays 16:30-18:30 & Wednesdays 10:30-12 2 Introduction China’s financial system is lagging behind other aspects of China’s economic development. Potential source of vulnerability Financial system is currently the focus of attention from policy-makers: midst of rapid change. Topic will be addressed in 3 steps: -Today: framework, characteristics and issues -March 19 : Integration/efficiency of capital markets -April 9 : Major threats: financial
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
2 3 Lecture Outline I- Framework of China’s financial system A-Role of financial systems B-Different types of financial institutions II-Weaknesses of the banking system A-Different types of actors B-Performance: misallocation of funds, overlending, financial repression, credit NPLs, III-Lack of maturity of the other financial markets A-Stock markets: Bad performance until 2006, low capitalization, lack of liquidity, institutional weaknesses B-Bond markets: underdevelopment Conclusion 4 A-Theoretical role of financial systems (positive effect on growth) I- Framework of China’s financial system Direct financial resources to their most productive use Achieve economies of scale in evaluating projects and providing financial services. Empirical findings: positive association of depth of financial intermediation (loans as a share of GDP) with both the level of development (GDP per capita) and the rate of economic growth -produce ex ante information about possible investment -monitor investment and exert corporate governance after providing finance -facilitate the trading, diversification, and management of risk -mobilize and pool savings: safeguard deposits and provide liquidity to borrowers and depositors -ease the exchange of goods and services.
Image of page 2
3 5 In China: Financial performance undermined Undermined by policy lending barriers to interregional lending distorted pricing poor managerial incentives lack of prudential financial regulation I- Framework of China’s financial system Switzerland China Netherlands Japan Hong Kong Germany Spain Malaysia Australia France Italy Luxembourg Korea Thailand USA Brazil Canada Chile India Phillipines Indonesia Argentina Mexico 0 50 100 150 200 Domestic Credit / GDP in % 6 I- Framework of China’s financial system
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
4 7 B-Different types of financial institutions
Image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern