Preview

chinese financial market

Powerful Essays
Open Document
Open Document
3171 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
chinese financial market
ECON 346
ECONOMICS OF TRANSITION AND
DEVELOPMENT: CHINA
Fall 2013
Professor Guofu Tan
Department of Economics
University of Southern California

Topic 11: Banks and Financial Markets
2

1.
2.

3.
4.
5.

Basics: Saving and Capital Formation
Basics: The Financial System and the Allocation of
Funds to Real Investment
The Financial System in China
Reform the Banking System
Development of Financial Markets

Econ 346: Economics of Transition and Development: China

Guofu Tan

Basics: Saving and Capital Formation
3



Why do people save?
 Life-cycle

saving: To meet long-term objectives, such as retirement, university attendance, or the purchase of a home  Precautionary

saving: For protection against unexpected setbacks, such as the loss of a job

 Bequest

saving: For the purpose of leaving inheritance

Econ 346: Economics of Transition and Development: China

Guofu Tan

Individual Saving
4

 Individual

inter-temporal consumption decision

 Personal

saving rate (personal savings divided by personal disposable income) varies across countries

 Marginal

Propensity to Consume (MPC) – the amount by which consumption rises when disposable income rises by $1

Econ 346: Economics of Transition and Development: China

Guofu Tan

China’s household savings
(in billion 1978 RMB)
5

Econ 346: Economics of Transition and Development: China

Guofu Tan

Modigliani-Cao savings rate and Mees-Ahmed savings rate (%)
6

Source: Modigliani and Cao (2004), China Compendium of Statistics 1949-2008, Statistical Yearbook 2010

Econ 346: Economics of Transition and Development: China

Guofu Tan

Bank Deposits, 2010 (as a ratio to GDP)
7

Source: Prasad and Ye(2012)

Econ 346: Economics of Transition and Development: China

Guofu Tan

Economy-wide Saving and Investment
8

 Gross

saving – the sum of household, corporate, government, and non-resident
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Powerful Essays

    Canada’s Benefit from a Transitioning Chinese Economy
    • 1838 Words
    • 8 Pages

    Canada’s Benefit from a Transitioning Chinese Economy

    During this period, China's GDP grew at an average annual rate of about 9 percent, or 7.5 percent on a per capita basis. The living standard of ordinary Chinese people improved significantly. The per person living space has doubled in urban areas and more than doubled in rural areas, and total household bank deposits, measured against the GDP, increased from less than 6 percent in 1978 to more than 40 percent in 1993. The number of people living in absolute poverty was substantially reduced from over 250 million to less than 100 million in this period as well. (p.4)…

    • 1838 Words
    • 8 Pages
    Powerful Essays
    Read More
  • Good Essays

    Business in China
    • 698 Words
    • 3 Pages

    Business in China

    Would US companies be better suited trying to "go it alone" in China or to partner with a company that will provide tangible assets and other services for the US-based MNC? What stumbling blocks might exist when partnering with a company in China?…

    • 698 Words
    • 3 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    AMERICAN Consumerism
    • 565 Words
    • 3 Pages

    AMERICAN Consumerism

    Secondly, the total value of the good and services produced within the economy in an excess amount brings about increase in consumer’s credit. Human want are unlimited and the desire to get more materials increases day after day, which will lead to debts because the consumers want to purchase for family, friends and others. Therefore the increase in consumer credits relative to gross domestic product (GDP) will lead to sharp decrease in saving.…

    • 565 Words
    • 3 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    A Brief Comparison of Banking System Betweeen China and Usa
    • 482 Words
    • 2 Pages

    A Brief Comparison of Banking System Betweeen China and Usa

    The USA which stands for the developed countries and China which is represent of the developing countries are two super countries in the world. Generally speaking, the USA seems to have more sustaining ability than China in the horrible financial tsunami, but the truth is that China is still comparatively safe now, but the USA has deeply fallen into the economic decline. Why? To a great extent, the banking system plays an important role.…

    • 482 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    HSBC In China
    • 1977 Words
    • 5 Pages

    HSBC In China

    Prior to the WTO accession, China’s market was not open up to foreign competition. In China’s centrally planned economy, the function of the state commercial banks was misplaces as a social function rather than economic function. Commercial banks had to adhere to the government to lending practices.…

    • 1977 Words
    • 5 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Chinas Business System
    • 11123 Words
    • 45 Pages

    Chinas Business System

    Introduction It is clear that China and India, in terms of geography, population size and regional cultural influence, are currently the most important nations in Asia. Both have experienced consistently high economic growth rates over recent decades, a fact which is made all the more notable by the size of their respective populations. This economic expansion is widely predicted to continue for some years, and it is assumed that these two nations, considered either separately or together, will have an outstandingly significant global and regional impact in the twenty first century.…

    • 11123 Words
    • 45 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    China and the Global Financial Crisis
    • 4941 Words
    • 20 Pages

    China and the Global Financial Crisis

    Over the past several years, China has enjoyed one of the world’s fastest growing economies and has been a major contributor to world economic growth. However, the current global financial crisis threatens to significantly slow China’s economy. Several Chinese industries, particularly the export sector, have been hit hard by crisis, and millions of workers have reportedly been laid off. This situation is of great concern to the Chinese government, which views rapid economic growth as critical to maintaining social stability. China is a major economic power and holds huge amounts of foreign exchange reserves, and thus its policies could have a major impact on the global economy. For example, the Chinese government in November 2008 announced plans to implement a $586 billion package to help stimulate the domestic economy. If successful, this plan could also boost Chinese demand for imports. In addition, in an effort to help stabilize the U.S. economy, China might boost its holdings of U.S. Treasury securities, which would help fund the Federal Government’s borrowing needs to purchase troubled U.S. assets and to finance economic stimulus packages. However, some U.S. policymakers have expressed concerns over the potential political and economic implications of China’s large and growing holdings of U.S. Government debt securities. This report will be updated as events warrant.…

    • 4941 Words
    • 20 Pages
    Powerful Essays
    Read More
  • Good Essays

    Chinese Banking System
    • 306 Words
    • 2 Pages

    Chinese Banking System

    In China savers are turning from traditional deposits to a higher return wealth management products; this trend is exposing risks to the Chinese banking system. Wealth management products are a mix of short term investments such as bonds, money market funds and other securities and the potential risk is that banks invest the proceeds from sales of these products in securities with longer maturities than short term investments; when products mature, banks persuade customers to either roll over the investments or pay out using funds raised from the sale of new products, but that strategy could fail if demand for new products drops and banks do not have enough money to pay holders of maturing products leading to serious repayment problems. Instead of managing each product separately, Chinese banks mingle all the funds coming from the products sold into one pot which is then invested, the pot has cash flow from the return of investments and also from the sale of new products which the banks can then use to cover redemptions. Banks need to invest in long term assets to get the returns they promise to customers and can not afford to be cashing out of investments each time a product matures.…

    • 306 Words
    • 2 Pages
    Good Essays
    Read More
  • Powerful Essays

    How efficient is Chinese financial market
    • 1429 Words
    • 6 Pages

    How efficient is Chinese financial market

    Financial market is a significant factor in economy development. Through financial market, people are able to transfer their surplus funds to those who have shortage which enhance efficiency. China's financial market started relatively late compared with developed countries. After the economy reform in 1978, China's step by step build up its own financial system. With the continuous improvement of the financial markets, people are started to question about whether China's financial market can perform efficiently. According to Eugene Fama's efficient market hypothesis (EMH), at a efficient market, the asset prices should reflect all publicly available information about the value of an asset. In other words, investors cannot forecast future stock prices using current available information (Mankiw, 2007).…

    • 1429 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    Leboncoin Market Survey China
    • 7359 Words
    • 30 Pages

    Leboncoin Market Survey China

    The Norwegian company Schibsted (owner of leboncoin.fr) is willing to develop his influence in China. They already developed 2 websites meant to be used by Chinese people with the same recipe as leboncoin.…

    • 7359 Words
    • 30 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Financial Markets
    • 1649 Words
    • 7 Pages

    Financial Markets

    1. How can the adverse selection problem explain why you are more likely to make a loan to a family member than to a stranger?…

    • 1649 Words
    • 7 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    the chinese economy final
    • 2675 Words
    • 9 Pages

    the chinese economy final

    The Chinese economy uses a five year plan strategy for economic planning and development. Currently, under implementation is twelfth five year plan that covers the years 2011-2015.…

    • 2675 Words
    • 9 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    China convention market
    • 2540 Words
    • 9 Pages

    China convention market

    The conventions and meetings industry has unlimited growth potential. It will bring substantial returns on investment. Therefore, all destinations should actively promote conventions and meetings.…

    • 2540 Words
    • 9 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Finanacial Market
    • 1964 Words
    • 8 Pages

    Finanacial Market

    A financial market is a market in which financial assets are traded. In addition to enabling exchange of previously issued financial assets, financial markets facilitate borrowing and lending by facilitating the sale by newly issued financial assets. Examples of financial markets include the New York Stock Exchange (resale of previously issued stock shares), the U.S. government bond market (resale of previously issued bonds), and the U.S. Treasury bills auction (sales of newly issued T-bills). A financial institution is an institution whose primary source of profits is through financial asset transactions. Examples of such financial institutions include discount brokers (e.g., Charles Schwab and Associates), banks, insurance companies, and complex multi-function financial institutions such as Merrill Lynch.…

    • 1964 Words
    • 8 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Financial Innovation and Regulation in China
    • 1852 Words
    • 8 Pages

    Financial Innovation and Regulation in China

    Ninth Symposium on Building the Financial System of the 21st Century China Development Reform Foundation Harvard Program on International Financial Systems Beijing, China, September 14-16, 2012 Topic 2: Financial Regulation and Financial Innovation Panel Remarks By Andrew Sheng 1 President Fung Global Institute I am very honoured to be invited by Lu Mai and Hal Scott to join for my first time, the US-China Symposium on Building the Financial System of the 21st century, a subject of a major research study of the Fung Global Institute. Some of you may be aware that Anthony Neoh (one of the founders of this Forum), Laura Cha and I are amongst the first people from outside China to be invited to work inside the Chinese bureaucracy. What we have learnt is that there is still considerable gap in understanding the complexities of China and explaining them to a non-Chinese audience. Winston Churchill famously said that the English people and the American people are divided by the same language. Similarly, those of us who speak Chinese find that understanding China is not easy unless you understand its history and complex culture, including the nuances in use of language and its syntax. As former Chairman of the Hong Kong Securities and Futures Commission, I relied very much on Harvard regulatory Professor Malcolm Sparrow’s maxim on the regulatory craft: “Pick Important Problems, Fix Them and Tell Everyone”. After working in China, I learnt that the Chinese approach to regulation is to use Chairman Mao’s dictum, “Identify the Principal Contradiction, Understand that Contradiction, and Deal with it.”…

    • 1852 Words
    • 8 Pages
    Powerful Essays
    Read More

Related Topics