A Contribution to the Empirics of Finance-growth Nexus in China: A Complex System Perspective

The paper empirically examines the causal interactions between Chinese financial development and economic growth using the perspective of complex systems as a metaphor in an attempt to provide a better understanding of the co-evolution of China's real and financial sectors. Using Hsiao's version of the Granger causality tests, the empirical results support a complex set of bidirectional causality between the financial development proxies and economic growth variables. Despite numerous alleged financial intermediation's inefficiencies, bidirectional causality would suggest a coherent and effective finance-growth ecosystem.