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Can China Grow Faster? A Diagnosis of the Fragmentation of Its Domestic Capital Market
Author:
Shang-Jin Weinull

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and
Ms. Genevieve Boyreau-Debraynull

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Series:
IMF Working Papers
Volume/Issue:
Volume 2004: Issue 076
Language:
English
Publication Date:
01 May 2004
DOI:
https://doi.org/10.5089/9781451849905.001
ISBN:
9781451849905
ISSN:
1018-5941
Pages:
45
Keywords:
WP; capital mobility; investment funds; saving-investment correlation
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper examines possible segmentation of the internal capital market in China. We employ two standard tools from the international finance literature to analyze financial integration across Chinese provinces. Both tests confirm a similar (and somewhat surprising) picture: capital mobility within China is low! Furthermore, the degree of internal financial integration appears to have decreased, rather than increased, in the 1990s relative to the preceding period. Finally, we document that the government tends to reallocate capital from more productive regions to less productive ones. In this sense, a smaller role of the government in the financial sector might increase the rate of economic growth.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2004: Issue 076