Financial Sector Reform

  • Martin Hovey
  • Tony Naughton


This chapter focuses upon China’s process of financial reform. While major changes have taken place, it is generally recognized that China still has a long way to go. The financial system remains dominated by banks, particularly state-owned institutions that retain many of the features of a repressed financial system. Experiments in developing other financial sectors have not been overly successful. Attempts are being made to free the major banks from the cycle of directed lending to inefficient state enterprises, resulting in non-performing loans. The quality of the loan portfolios, supervision and regulation of the banking sector is a hindrance to progress. On the positive side, the growing influence of Hong Kong and the greater freedom permitted to foreign institutions is likely to provide a much-needed stimulus to the domestic market.


Interest Rate Central Bank Commercial Bank Banking Sector Foreign Bank 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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© Palgrave Macmillan, a division of Macmillan Publishers Limited 2000

Authors and Affiliations

  • Martin Hovey
  • Tony Naughton

There are no affiliations available

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