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Ratio Working Paper No. 234: Capital Freedom, Financial Development and Provincial Economic Growth in China

PublicationWorking paper
Bengt Söderlund, Ekonomisk tillväxt, Företagandets villkor, Institutionell ekonomi, Kina, Patrik Tingvall
Ratio Working Paper No. 234
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Abstract

For more than three decades, China has managed to combine rapid economic growth with a heavily regulated financial sector. The discrepancy between economic and financial development has raised the question of whether China might be an exception to the so-called finance-growth nexus. This study examines the relationship between finance and growth at the provincial level in China using a new set of measures of capital freedom and financial development. The results indicate that capital freedom and financial development are associated with both higher income and growth rates. In particular, we find that the marketization of financial institutions and strengthening of legal and government institutions have a particularly strong impact on income and growth in low-income provinces.

Related content: Capital Freedom, Financial Development and Provincial Economic Growth in China

Söderlund, B. & Gustavsson Tingvall, P. (2014). Capital Freedom, Financial Development and Provincial Economic Growth in China. Ratio Working Paper No. 234.

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Ratio Working Paper No. 234: Capital Freedom, Financial Development and Provincial Economic Growth in China
Working paperPublication
Söderlund, B. & Gustavsson Tingvall, P.
Publication year

2014

Abstract

For more than three decades, China has managed to combine rapid economic growth with a heavily regulated financial sector. The discrepancy between economic and financial development has raised the question of whether China might be an exception to the so-called finance-growth nexus. This study examines the relationship between finance and growth at the provincial level in China using a new set of measures of capital freedom and financial development. The results indicate that capital freedom and financial development are associated with both higher income and growth rates. In particular, we find that the marketization of financial institutions and strengthening of legal and government institutions have a particularly strong impact on income and growth in low-income provinces.

Related content: Capital Freedom, Financial Development and Provincial Economic Growth in China

Working Paper No. 184. Dynamic Effects of Institutions on Firm-Level Exports
Working paperPublication
Söderlund, B. & Gustavsson Tingvall, P.
Publication year

2012

Abstract

The gap between theoretically predicted trade patterns and actual trade suggests that our understanding of what shapes trade patterns is incomplete. Institutional barriers may be one factor behind this gap and recent research suggests that institutions are a greater obstacle to trade than are tariffs. Using detailed firm-level data, we analyze how institutional quality in recipient countries affects exports by Swedish firms. Our results suggest that weak institutions hamper exports and that firms that successfully maintain long-term exports do so by starting small and successively increase exports as they learn to know the target market.

Related content: Dynamic effects of institutions on firm-level exports

Working Paper No. 184. Dynamic Effects of Institutions on Firm-Level Exports
Working paperPublication
Söderlund, B. & Gustavsson Tingvall, P.
Publication year

2012

Abstract

The gap between theoretically predicted trade patterns and actual trade suggests that our understanding of what shapes trade patterns is incomplete. Institutional barriers may be one factor behind this gap and recent research suggests that institutions are a greater obstacle to trade than are tariffs. Using detailed firm-level data, we analyze how institutional quality in recipient countries affects exports by Swedish firms. Our results suggest that weak institutions hamper exports and that firms that successfully maintain long-term exports do so by starting small and successively increase exports as they learn to know the target market.

Related content: Dynamic effects of institutions on firm-level exports

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