The Changing Capital Markets of East Asia

By Ky Cao | Go to book overview

Chapter 5

China’s capital market and its prudential framework

Joe H. Zhang and Joan X. Zheng


INTRODUCTION

China’s economic liberalisation has broadened the avenues of finance for its business sector. Apart from traditional bank borrowing (indirect finance), companies can also raise funds by issuing shares and bonds to the public (direct finance) under certain conditions. With China’s capital market gaining sophistication, prudential supervision has become a prominent issue. Further development of the capital market will depend critically on the setting and, more importantly, the enforcement of proper prudential standards.

The term ‘capital market’ is normally used to refer to the equity market and the market for securities at the longer end of the maturity spectrum. However, this chapter has to use the term in a broader sense to cover the whole financial market only excluding the inter-bank market. This definition is adopted because most of China’s equity investments are not through the securities market. The distinction between capital markets and short-term money markets is extremely blurred in China due to the legacy of old centralised credit allocation.

The capital market in China has experienced a transition in the past ten years; and the transition is still under way. The austerity programme launched in June 1993 should be seen as a milestone in the history of China’s capital market development and a starting point for a new phase. The Chinese government aimed to consolidate the achievements of the past ten years in capital market liberalisation through cleaning up the market environment, including its legal framework, and alleviating the economic and social side-effects of liberalisation. The success of the austerity programme eventually hinged on the healthy growth of the capital market.

This chapter aims to examine the evolution of the Chinese government’s regulation of various segments of the capital market, the realities of the business sector and the macroeconomic policy implications of the current regulatory framework. Some of the questions that will be addressed include: why does the Chinese government encourage direct finance? What is the rationale of the policy? And why does the government try so hard to control it at the same time?

-148-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited page

Bookmark this page
The Changing Capital Markets of East Asia
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this book
  • Bookmarks
  • Highlights & Notes
  • Citations
/ 344

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.