- Title
- An analysis of local government debt and shadow banking in China from a Minskyan perspective
- Creator
- Qi, Chaoying
- Relation
- University of Newcastle Research Higher Degree Thesis
- Resource Type
- thesis
- Date
- 2017
- Description
- Research Doctorate - Doctor of Philosophy (PhD)
- Description
- The Global Financial Crisis (GFC) has posed a challenge to the implementation of mainstream macroeconomic theories. Although China was less affected than some economies by the GFC, it is still experiencing serious issues, such as heavy local government debt (LGD) and shadow banking activities, which are destabilising the financial systems in the country. This study develops an integrated and coherent theoretical and empirical framework for understanding the LGD and shadow banking sector in China. The study has the following aims: 1) to examine the current situation of China’s rapidly growing LGD and emerging shadow banking activities; 2) to analyse the reasons for the dramatic development of these two phenomena, together with their impacts, especially the risks to economic growth and financial systems; 3) to develop a macroeconomic model based on the monetary stocks and flows of different sectors, including households, firms, traditional banking, shadow banking, central government and the central bank; 4) using this model, to identify the likely consequences of the growing LGD and the rise of shadow banking; and 5) to offer policy recommendations to avoid a likely financial crisis. The central contribution of the study is to examine China’s LGD and shadow banking problems through the lens of Modern Monetary Theory (MMT) and to conceptualise these two issues in a Post-Keynesian (PK) Stock-Flow Consistent (SFC) framework. A growing number of researchers have warned about the relation between shadow banking and the rise of private sector indebtedness, but few studies have linked this to rising local government indebtedness. Therefore, this is the main contribution of this dissertation. The main recommendations are, firstly, that the regulation and supervision systems in China need to be strengthened; and secondly, the central government needs to reform the taxation regime, namely implement tax decentralisation, which can give local governments more stable revenues. No one, to my knowledge, has developed a model this complete for China. Therefore, my study will serve as a useful reference for future researchers who wish to apply Minsky’s theory and MMT to the study of the Chinese economy.
- Subject
- local government debt; shadow banking; stock-flow consistent modelling; Minsky; modern monetary theory
- Identifier
- http://hdl.handle.net/1959.13/1355217
- Identifier
- uon:31430
- Rights
- Copyright 2017 Chaoying Qi
- Language
- eng
- Full Text
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|---|---|---|---|---|---|---|---|
| View Details Download | ATTACHMENT01 | Thesis | 1 MB | Adobe Acrobat PDF | View Details Download | ||
| View Details Download | ATTACHMENT02 | Abstract | 878 KB | Adobe Acrobat PDF | View Details Download |