Chapter

China’s Painful Decisions:

Leo F. Goodstadt

in Reluctant Regulators

Published by Hong Kong University Press

Published in print April 2011 | ISBN: 9789888083251
Published online September 2011 | e-ISBN: 9789882207349 | DOI: http://dx.doi.org/10.5790/hongkong/9789888083251.003.0005
China’s Painful Decisions:

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Policy makers were not able to recognize moral hazard and the fact that lightly regulated markets had certain limits. In contrast to the experience of Washington and London in terms of making misguided decisions, the financial modernization of China signifies a reaction of defense after an evaluation of the underlying merits of the Anglo-American regulatory culture. The country's public finances and financial institutions were burdened by state interference in banking business, constraints on foreign and domestic competition, and the ignorance of moral hazard. These problems were intensified during the crisis, and previous reforms on banking were at risk because of attempts to protect the nation from recession. In this chapter, four case studies are examined that look at the shock felt in Beijing from the Asian financial crisis, the effects of the financial crisis on the banking industry, and the relationship between Hong Kong and China's banking reforms.

Keywords: moral hazard; financial modernization; competition constraints; state interference; Hong Kong; Asian financial crisis; banking industry

Chapter.  7434 words. 

Subjects: Business and Management

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