Finance–growth nexus in China from an endogenous switching perspective

William W. Chow, King Fai Fung, Man Kwong Leung

Research output: Journal article publicationJournal articleAcademic researchpeer-review

9 Citations (Scopus)


This study examines the relationship between financial development and economic growth across Chinese provinces with switching causality. Four states are considered: bidirectional causality (state 1); one-way causality from growth to finance (state 2); one-way causality from finance to growth (state 3); and non-causality (state 4). While state 3 dominates in developed regions, states 1 and 3 occur intermittently in other regions. This implies that the demand for financial services induced by local economic growth plays a stronger role in driving financial development in under-developed regions. Consistent with prior research, bank loans negatively affect economic growth in China.
Original languageEnglish
Pages (from-to)443-462
Number of pages20
JournalJournal of International Trade and Economic Development
Issue number4
Publication statusPublished - 19 May 2018


  • China regions
  • economic growth
  • Financial development
  • switching causality

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development
  • Aerospace Engineering


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