1、 1 原 文： The Impact of Bank and Non-Bank Financial Institutionson Local Economic Growth in China Abstract This paper provides evidence on the relationship between finance and growth in a fast growing country, such as China. Employing data of 27 Chinese provinces over the period 19952003, we study whe
2、ther the financial development of two different types of financial institutions banks and non-banks have a (significantly different) impact on local economic growth. Our findings indicate that banking development shows a statistically significant and economically more pronounced impact on local econ
3、omic growth. Key words Growth . Financial development . Chinese provinces . Banks JEL codes E44 . G21 1 Introduction The relation between finance and growth has been long under debate. Although some researchers have argued that finance only reacts to the expectation of growth, there has been overwhe
4、lming evidence that financial development plays an important role in promoting the growth of developed economies (see e.g. Levine (2004) for a survey). Evidence is rather mixed within developing countries. While finance seems to promote growth in some Latin American countries (Haber (1991, 1997), re
5、searchers disagree on the role played by formal and informal finance in China, one of the most important developing countries in the world. Understanding the finance and growth issue in China is of particular importance. Chinas case is not unique. Most transition countries, like China, suffer from r
6、elatively weak legal and financial systems. Therefore, the Chinese experience could be relevant for other countries with similar growth potential and similar legal and financial systems. In addition, with the increasing globalization of trade and international capital flows, the sustainability of Ch
7、inas growth and the stability of its financial system matter not only for the country itself, but also for the rest of the world. Recent debate on finance and growth in China boils down to the question on how Chinese firms are financed and monitored. One strand of literature reasons that the Chinese
8、 legal system and formal financial sector are too weak to enforce sound 2 governance and thus the law, finance and growth nexus does not hold in China (e.g., Allen et al. (2005) and Boyreau-Debray (2003). Chinese growth then stems from informal financing channels and institutions. The other strand r
9、easons that formal finance in China contributes to growth, despite the relative weakness of the legal system (e.g. Hasan et al. (2006), Ayyagari et al. (2007), Rousseau and Xiao (2007), or (Demitriades et al. 2008).1 Informal finance serves firms who cannot tap formal finance. However, informal fina
10、nce cannot serve the needs of the higher end of the market since their monitoring and enforcement mechanisms are insufficiently developed (Ayyagari et al. (2007). We find that banking development plays an important role in Chinese economic growth. Our evidence taken together with that from other rec
11、ent papers (e.g. Hasan et al. (2006), Ayyagari et al. (2007), Rousseau and Xiao (2007), and Demetriades et al. (2008), who also support the role of formal finance in China using different datasets and methods, show that the Allen et al. (2005) conjectures are becoming very much a minority view. Our
12、paper therefore shifts the balance of evidence away from the view that formal finance played little role in financing Chinese economic growth. We contribute to the debate on formal and informal finance by using Chinas publicly available macro data, employing a set of new perspectives. First, inspire
13、d by the classification in Ayyagari et al. (2007) and Allen et al. (2005), we study the impact of formal and informal finance on growth by exploiting heterogeneity between bank and non bank financial institutions. Ayyagari et al. (2007) separate bank finance which includes local commercial banks and
14、 foreign commercial banks, from informal finance which includes financing from informal sources such as non-bank financial institution.2 Allen etal. (2005) also distinguishes financing sources from two groups, bank finance and self fund raising, that includes all other sources such as retained earni
15、ngs, informal sources, loans from family and friends, trade credit, investment funds, equity and the other category. In either way of classification, these two studies include the non-bank financial institutions as part of informal finance and thus argue that non-bank financial institutions are clea
16、rly different from formal sectors.3 However, unlike their counterparts that are informal under common law, non-bank financial institutions under Chinas law actually operate more as contractual 3 arrangements. Moreover, like formal financial institutions such as banks, non bank financial institutions
17、 are also supervised by the Chinese central bank. These facts suggest that though Chinese non-bank financial institutions may belong to informal finance, they actually have characteristics from the formal sector and are in this respect comparable to banks. The uniqueness of Chinas non-bank financial
18、 institutions therefore allows our study of the heterogeneity between those two types of financial institutions to gain further insights on whether the formal or the informal financial sector leads to growth in China, helping to shed light on the difference in results between Allen et al. (2005) and
19、 Ayyagari et al. (2007). Clearly distinguishing non-bank financial institutions from banks in our study has several other merits. First, we add to previous studies employing macro data often consider only banks, as they dominate the Chinese financial sector. Non-bank financial institutions such as r
20、ural and urban credit cooperatives, trust and investment companies, and financial companies have been installed as reactions to developments in the formal banking system (see e.g. Laurenceson and Chai (2003), and Kumar et al. (1997). Second, while cross country differences, such as political and cul
21、tural variations as well as heterogeneity in accounting standards, make it difficult to directly compare Chinese banks with their international counterparts, Chinas non-bank financial institutions can serve as a more appropriate reference group. For identifying the causality between finance and grow
22、th, it will be ideal if the difference between banks and non-bank financial institutions only lies in the reforms they have received. Therefore, under the assumption that better reforms lead to greater efficiency, the testable hypothesis will be that the financial development of institutions having
23、benefited more from reforms exhibits greater correlation with growth. Nonetheless, banks and non-bank financial institutions are also different in some other aspects. For instance, while banks have received much earlier and more profound financial reforms but have granted loans mostly to large and medium sized firms in China, non-bank financial institutions have seldom benefited from reforms but have mainly extended their loans to small or private firms. Such differences, however, are working in favor of identifying the causality between finance and
