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Bank Efficiency And Regional Economic Growth: Evidence From China, Hong Zhuang, Haiyan Yin, Miao Grace Wang, Jiawen Yang

Economics Faculty Research and Publications

This paper examines for the first time the relationship between bank efficiency and regional economic growth in China with provincial data over 1995 - 2014. We find consistent and strong evidence that bank efficiency positively affects regional economic growth. Further, bank efficiency exerts a more pronounced impact on economic growth in inland provinces than coastal regions. The insignificant effect of the quantity of credit in our regressions suggests that a mere expansion of financial volume is not effective in promoting regional economic growth, whereas the improvement in the quality of financial intermediation plays an important role fostering provincial economic growth.