by Nicholas Borst and Nicholar R Lardy
PIIE Working Paper no. WP-15-4, March 2015
The banking system of the People’s Republic of China (PRC) is now the largest in the world, and its capital markets are rapidly
approaching the size of those in the advanced economies. This paper traces the evolution of the PRC’s financial system away from a traditional bank-dominated and state-directed financial system toward a more complex, market-based system and analyzes the optimal sequence of financial reforms needed to manage the new risks accompanying this evolution.