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

Guseon Ji, Daniel Sungyeon Kim, Kwangwon Ahn

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

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.

Original languageEnglish
Article number3721
JournalSustainability (Switzerland)
Volume11
Issue number13
DOIs
Publication statusPublished - 2019 Jul 1

Fingerprint

bank
reform
stock market
market
financial market
credit
banking
debt
evidence
indebtedness
Monitoring
monitoring
firm
economy
Financial markets

All Science Journal Classification (ASJC) codes

  • Geography, Planning and Development
  • Renewable Energy, Sustainability and the Environment
  • Management, Monitoring, Policy and Law

Cite this

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abstract = "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.",
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Financial structure and systemic risk of banks : Evidence from Chinese reform. / Ji, Guseon; Kim, Daniel Sungyeon; Ahn, Kwangwon.

In: Sustainability (Switzerland), Vol. 11, No. 13, 3721, 01.07.2019.

Research output: Contribution to journalArticle

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AB - 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.

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