Economics

Evolution of the Chinese guarantee network under financial crisis and stimulus program

Y. Wang, Q. Zhang, et al.

This study by Yingli Wang, Qingpeng Zhang, and Xiaoguang Yang delves into the evolving dynamics of the Chinese guarantee network during the turbulent years from 2007 to 2012. It reveals surprising insights into how the 2007-2008 financial crisis initially shrank the network but paradoxically boosted its stability, while government interventions later led to fragility. Discover the complex interplay between external shocks and policy actions.

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Abstract

This paper analyzes the dynamic Chinese guarantee network from 2007 to 2012 using a comprehensive bank loan dataset. The study finds that the 2007-2008 financial crisis initially reduced the network's size and connectivity but increased its stability. The subsequent stimulus program, while boosting economic growth, increased mutual guarantee behaviors, leading to a fragile network structure. Finally, monetary policy adjustments improved resilience by reducing mutual guarantees. Counterintuitively, the crisis enhanced resilience, while the bailout decreased it, highlighting the complex interplay between external shocks and government interventions.

Publisher

Nature Communications

Published On

Jul 20, 2020

Authors

Yingli Wang, Qingpeng Zhang, Xiaoguang Yang

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