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Does Financial Repression Inhibit or Facilitate Economic Growth? A Case Study of Chinese Reform Experience *
Author(s) -
Huang Yiping,
Wang Xun
Publication year - 2011
Publication title -
oxford bulletin of economics and statistics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.131
H-Index - 73
eISSN - 1468-0084
pISSN - 0305-9049
DOI - 10.1111/j.1468-0084.2011.00677.x
Subject(s) - financial repression , economics , china , liberalization , estimation , psychological repression , capital accumulation , capital (architecture) , index (typography) , economic reform , interest rate , monetary economics , macroeconomics , economic system , human capital , market economy , political science , history , biochemistry , gene expression , chemistry , management , archaeology , world wide web , law , computer science , gene
This article examines the impact of financial repression on economic growth during China's reform period. The aggregate financial repression index suggests that China's financial liberalization has been steady but gradual. Empirical estimation confirms that, on average, repressive policies helped economic growth, thanks probably to the prudent liberalization approach. But the impact turned from positive in the 1980s and the 1990s to negative in the 2000s, suggesting rising efficiency losses in recent years. Specifically, we find that lending to the state sector, interest rate regulation and capital account control were the main factors constraining China's economic growth in recent years.