Abstract
The leverage ratio of non-financial businesses and the government sector in China has been on the rise since the outbreak of the global financial crisis. China’s leverage ratios are not high compared with those in developed countries but substantial implicit liabilities and fast growth of debt indicate considerable potential risks. The rapidly rising leverage ratio is closely connected with such factors as overreliance on indirect financing, low efficiency in the use of funds, large amounts of funds occupied ineffectively because of overcapacity and overuse of monetary and credit policies as instruments. Now the top priority for financial regulators is to resolve the debt issue and prevent systemic financial risks.
CLC: F83; Document code: A; Article ID: 1002—8102(2016)01—0005—17
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
It should be noted that the estimated debt of the non-financial business sector includes to a considerable degree the liabilities of local government financing platforms (LGFPs). To avoid repeated estimation, the liabilities of LGFPs estimated earlier need to be taken out here.
- 2.
Reference: Wang (2013).
- 3.
Survey and Research Center for China Household Finance. China Informal Finance Development Report. January 2014.
- 4.
The figures are the result of a survey conducted by the Survey and Research Center for China Household Finance among 5000 representative households across the country from June 15 to July 2, 2015.
References
Yang Li et al. China’s National Balance Sheet 2013. China Social Sciences Press. 2013.
Ceccheiti et al. The Real Effects of Debt. BIS Working Paper. No 352, 2011.
Hana Polackova. Contingent Government Liabilities: A Hidden Risk for Fiscal Stabilities. World Bank Policy Research Working Paper, No. 1989. 1998.
IMF. World Economic Outlook. Second Quarter. 201-1.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2019 The Author(s)
About this chapter
Cite this chapter
Ma, J., Dong, X., Shi, H., Xu, J., Ma, X. (2019). China’s Leverage Ratio and Systemic Financial Risk Prevention. In: He, D., Wang, C. (eds) A New Era. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-10-8357-0_4
Download citation
DOI: https://doi.org/10.1007/978-981-10-8357-0_4
Published:
Publisher Name: Palgrave Macmillan, Singapore
Print ISBN: 978-981-10-8356-3
Online ISBN: 978-981-10-8357-0
eBook Packages: Political Science and International StudiesPolitical Science and International Studies (R0)