Abstract

The rise of China as a global economic power has caused concern that a crisis in Chinese banking could lead to a worldwide downturn similar to the Global Financial Crisis. Early warning indicators, such as the credit-to-GDP gap and the debt service ratio, are worrying. It is, therefore, worthwhile to study the key factors affecting bank deposits in China. We estimate a dynamic panel model applied to a panel of 63 Chinese banks and find that bank-specific fundamentals, as opposed to macroeconomic factors, are the main drivers of changes in bank deposits. JEL: E44, G21, G28

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