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Reluctant RegulatorsHow the West Created and How China Survived the Global Financial Crisis$
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Leo F. Goodstadt

Print publication date: 2011

Print ISBN-13: 9789888083251

Published to Hong Kong Scholarship Online: September 2011

DOI: 10.5790/hongkong/9789888083251.001.0001

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PRINTED FROM HONG KONG SCHOLARSHIP ONLINE (www.hongkong.universitypressscholarship.com). (c) Copyright Hong Kong University Press, 2022. An individual user may print out a PDF of a single chapter of a monograph in HKSO for personal use.date: 03 July 2022

China’s Painful Decisions:

China’s Painful Decisions:

Politics in Command

(p.76) (p.77) 4 China’s Painful Decisions:
Reluctant Regulators

Leo F. Goodstadt

Hong Kong University Press

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

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