Financial structure and systemic risk of banks: Evidence from Chinese reform

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<jats:p>Using Chinese data from 2006 to 2014, we find that a shift in the financial structure towards a more market-based structure can reduce the systemic risk of the banking sector. One transmission channel through which this occurs is the improvement in an individual firm’s debt repaying capacity, which is positively influenced by the development of stock markets. Another channel is the enhanced credit monitoring of borrowers by banks, owing to their slower credit growth. Our results imply that the shift toward market-based financial structure could lead to the development of financial market as well as the enhancement of the stability of an economy.</jats:p>
Publisher
MDPI
Issue Date
2019-07
Language
English
Article Type
Article
Citation

Sustainability, v.11, no.13, pp.3721

ISSN
2071-1050
DOI
10.3390/su11133721
URI
http://hdl.handle.net/10203/264273
Appears in Collection
RIMS Journal Papers
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