How Much Has Informal Credit Lending Responded to Monetary Policy in China? The Case of Wenzhou

Qin, Duo; Xu, Zhong; Zhang, Xuechun

Abstract

This study investigates empirically what the major factors are which have driven Wenzhou's informal credit market and how much that market is responsive to monetary policies and the formal banking conditions nationwide. A number of relatively stable factors have been identified from this volatile market through a careful exploration of a monthly survey data set for the period of 2003–2011. The main findings are: (i) Wenzhou's informal credit lending rates are highly receptive to monetary policies; (ii) Wenzhou's market is dominantly demand driven; (iii) Wenzhou's informal lending is substitutive to bank savings in the short run but complementary to banking lending in the long run; and (iv) Wenzhou's market is complementary to excessive investments in the local real estate market.

Citation

Qin, D., Xu, Z., & Zhang, X. (2014). How Much Has Informal Credit Lending Responded to Monetary Policy in China? The Case of Wenzhou. Journal of Asian Economics, 31-32, 22-31. https://doi.org/10.1016/j.asieco.2014.03.001

• Journal Article Type: Article
• Publication Date: Mar 1, 2014
• Deposit Date: Mar 28, 2014
• Journal: Journal of Asian Economics
• Print ISSN: 1049-0078
• Electronic ISSN: 1873-7927
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 31-32
• Pages: 22-31
• DOI: https://doi.org/10.1016/j.asieco.2014.03.001