Research on the threshold of symbiosis between finance and real economy – empirical test based on banking panel threshold model
Purpose – Starting from the theoretical mechanism of profit sharing between finance and the real economy, this paper reviews and analyzes the profitability of China's banking industry and makes a horizontal comparison with the banking industry of the United States, Japan, and Germany. Design/me...
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| Format: | Article |
| Language: | English |
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Emerald Publishing
2021-12-01
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| Series: | China Political Economy |
| Subjects: | |
| Online Access: | https://www.emerald.com/insight/content/doi/10.1108/CPE-11-2021-0013/full/pdf |
| _version_ | 1797791583655952384 |
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| author | Conglai Fan Xinlei Cai Jian Lin |
| author_facet | Conglai Fan Xinlei Cai Jian Lin |
| author_sort | Conglai Fan |
| collection | DOAJ |
| description | Purpose – Starting from the theoretical mechanism of profit sharing between finance and the real economy, this paper reviews and analyzes the profitability of China's banking industry and makes a horizontal comparison with the banking industry of the United States, Japan, and Germany. Design/methodology/approach – Based on the panel threshold model, it is found that there is a dual-threshold asymmetric effect between banking profit and the growth of real economy. When the net profit rate of the banking industry is lower than 0.491%, the increase in banking profitability will inhibit the growth of real economy due to profit grabbing; when the rate falls within the range of 0.491–0.801%, the increase in bank profitability is conducive to the growth of real economy. Findings – Finance and the real economy are in the most comfortable symbiotic state; when the rate is higher than 0.801%, the continued increase in bank profitability will weaken the promotion effect of finance on the real economy, but bank profitability and the growth of real economy are still in a symbiotic state of positive promotion. Originality/value – The promotion effect of China's bank profitability to the growth of real economy has shifted from the suboptimal state to the optimal range as a whole, which is attributed to the strong deleveraging and strict supervision of the Chinese government after 2016, the timely and decisive “stepping on the brakes”, pulling the financial sector back from the “illusion” caused by “self-circulated” profits and preventing it from harming the real economy. |
| first_indexed | 2024-03-13T02:20:56Z |
| format | Article |
| id | doaj.art-63597a5610ca41ac8691c6c30c5fcfce |
| institution | Directory Open Access Journal |
| issn | 2516-1652 |
| language | English |
| last_indexed | 2024-03-13T02:20:56Z |
| publishDate | 2021-12-01 |
| publisher | Emerald Publishing |
| record_format | Article |
| series | China Political Economy |
| spelling | doaj.art-63597a5610ca41ac8691c6c30c5fcfce2023-06-30T09:36:49ZengEmerald PublishingChina Political Economy2516-16522021-12-014214616910.1108/CPE-11-2021-0013Research on the threshold of symbiosis between finance and real economy – empirical test based on banking panel threshold modelConglai Fan0Xinlei Cai1Jian Lin2Yangtze River Delta Economics and Social Development Research Center, Nanjing University, Nanjing, ChinaYangtze River Delta Economics and Social Development Research Center, Nanjing University, Nanjing, ChinaYangtze River Delta Economics and Social Development Research Center, Nanjing University, Nanjing, ChinaPurpose – Starting from the theoretical mechanism of profit sharing between finance and the real economy, this paper reviews and analyzes the profitability of China's banking industry and makes a horizontal comparison with the banking industry of the United States, Japan, and Germany. Design/methodology/approach – Based on the panel threshold model, it is found that there is a dual-threshold asymmetric effect between banking profit and the growth of real economy. When the net profit rate of the banking industry is lower than 0.491%, the increase in banking profitability will inhibit the growth of real economy due to profit grabbing; when the rate falls within the range of 0.491–0.801%, the increase in bank profitability is conducive to the growth of real economy. Findings – Finance and the real economy are in the most comfortable symbiotic state; when the rate is higher than 0.801%, the continued increase in bank profitability will weaken the promotion effect of finance on the real economy, but bank profitability and the growth of real economy are still in a symbiotic state of positive promotion. Originality/value – The promotion effect of China's bank profitability to the growth of real economy has shifted from the suboptimal state to the optimal range as a whole, which is attributed to the strong deleveraging and strict supervision of the Chinese government after 2016, the timely and decisive “stepping on the brakes”, pulling the financial sector back from the “illusion” caused by “self-circulated” profits and preventing it from harming the real economy.https://www.emerald.com/insight/content/doi/10.1108/CPE-11-2021-0013/full/pdfBanking profitReal economyThreshold effectReform path |
| spellingShingle | Conglai Fan Xinlei Cai Jian Lin Research on the threshold of symbiosis between finance and real economy – empirical test based on banking panel threshold model China Political Economy Banking profit Real economy Threshold effect Reform path |
| title | Research on the threshold of symbiosis between finance and real economy – empirical test based on banking panel threshold model |
| title_full | Research on the threshold of symbiosis between finance and real economy – empirical test based on banking panel threshold model |
| title_fullStr | Research on the threshold of symbiosis between finance and real economy – empirical test based on banking panel threshold model |
| title_full_unstemmed | Research on the threshold of symbiosis between finance and real economy – empirical test based on banking panel threshold model |
| title_short | Research on the threshold of symbiosis between finance and real economy – empirical test based on banking panel threshold model |
| title_sort | research on the threshold of symbiosis between finance and real economy empirical test based on banking panel threshold model |
| topic | Banking profit Real economy Threshold effect Reform path |
| url | https://www.emerald.com/insight/content/doi/10.1108/CPE-11-2021-0013/full/pdf |
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