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Is China’s Financial Sector Reform the Answer to Economic Globalisation?

Lucia Morales, Bernadette Andreosso-O’Callaghan

Abstract


The Chinese banking system is of interest to the analysts and scholars who seek to understand whether China’s financial reforms are susceptible to contribute to the needed conditions that support fast economic growth and development. Before the Global Financial Crisis, China’s economy was growing rapidly, and the country has now embarked upon a “new normal economic model.” This entails a greater development scope for China’s financial system. “The Big Four” Chinese commercial banks remain under the control and surveillance of the central government, a situation that raises significant criticisms among those who support banking deregulation, liberalisation and efficiency. However, China has shown that it was relatively prepared to manage two major crises – the Asian Economic and Financial Crisis, and the Global Financial Crisis – and that the close monitoring of its financial system should not be too easily dismissed. The main findings from this study highlight that the “Big Four” do not seem to be impacted upon by regional or global uncertainty, but that causal dynamics exist between Chinese top banks and regional market uncertainty, a phenomenon that needs to be carefully considered by policy makers.


Keywords


“The Big Four”; Financial Reform; Economic and Policy Uncertainty; Market Models; Dynamic Causality.

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DOI: https://doi.org/10.14666/2194-7759-8-2-003

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