Enping financial crisis

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The Enping financial crisis occurred in Enping, Jiangmen, Guangdong in China. This financial crisis refers to the localized financial risk events that occurred in Enping in the 1990s, and at the height of the situation, there were two serious bank runs in June 1995 and August 1996, [1] which at one time led to financial paralysis in the entire province of Guangdong. [2]

Contents

Backstories

In the early stage of Chinese economic reform, Guangdong Province, as the frontier of opening up, had once experienced rapid economic development. The State Council introduced many preferential policies for Guangdong's economic development, but this also led to the unorganized development of finance in Guangdong, and a large number of debt crises and financial incidents began to appear. [3] In 1990s, Guangdong Province experienced problems of economic overheating and bubble expansion.The high-speed flow of capital was accompanied by the phenomenon of a large number of loans being repaid by borrowing, [4] meanwhile the incidence of financial crimes had also increased. [5]

Beginning in 1992, mainland China began to be keen on building development zones, investing in real estate, investing in stocks and capital-raising, and, in terms of economic indicators, was keen on raising fixed-asset investment, increasing credit investment, increasing currency issuance and stimulating inflation, while the phenomena of indiscriminate capital-raising, indiscriminate borrowing and indiscriminate establishment of financial institutions appeared in the economic order. [6]

Fraud

Local officials, as well as the bank managers at the local China Construction Bank (CCB) branch, had illegally allocated funds to their own projects. [7] [8] Other banks involved included the other three of the "big four" Chinese banks: the Bank of China, the Industrial and Commercial Bank of China, and the Agricultural Bank of China. [9] The banks lost US$509.5m (CN¥  3.6 billion (US$509m) and HK$ 3.68 million (around US$0.5m)) due to the fraud, [9] with the CCB branch alone estimated to have lost US$480m. [7]

Aftermath

Losses incurred by the scandal cost the People's Bank of China (PBOC) RMB 6.8b. [10] As banks pulled out of Enping, residents were denied access to financial services into the early 2010s. [11] [12]

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References

  1. ↑ 赖颢宁 (2001-03-28). "中央调查恩平金融风险案：头号逃犯被擒受审". 新快报. Archived from the original on 2004-07-04. Retrieved 2016-02-14.
  2. ↑ 冷啸 (2001-08-01). "恩平，告别金融之痛". 南风窗: 22–25.
  3. ↑ 张继伟、高翔 (2001-05-05). "广东金融业排雷". 财经.
  4. ↑ 雷比璐 (1999-07-15). "广东金融风险成因初探". 特区与港澳经济 (1999年03期).
  5. ↑ 赵芳、钱波. "广东金融犯罪现状及趋势研究". 政法学刊 (2004年06期).
  6. ↑ 任志江; 汤希 (2016-03-01). "改革开放以来两次"软着陆"实践的经验教训及历史启示". 贵州社会科学 (2016年03期).
  7. 1 2 Mufson, Steven (22 November 1997). "FAITHFUL CHINESE SAVERS KEEP BANKING SYSTEM AFLOAT". Washington Post. ISSN   0190-8286 . Retrieved 2020-06-22– via www.washingtonpost.com.
  8. ↑ Zhu, Rongji (2013). Zhu Rongji on the Record: The Road to Reform: 1991–1997. Translated by Mei, June. Brookings Institution Press. p. 440. ISBN   9780815725183.
  9. 1 2 Nolan, Peter (2008). Integrating China: Towards the Coordinated Market Economy. Anthem Press. p. 136. ISBN   9781843312383.
  10. ↑ Cousin, Violaine (2008). Banking in China (2nd ed.). Palgrave Macmillan. p. 48. doi:10.1057/9780230306967. ISBN   978-1-349-32344-9.
  11. ↑ https://www.afdi.org.cn/files/f3532.pdf [ bare URL PDF ]
  12. ↑ World Bank (2010-12-07). Reducing Inequality for Shared Growth in China: Strategy and Policy Options for Guangdong Province (PDF). The World Bank. p. 135. doi:10.1596/978-0-8213-8484-8. ISBN   978-0-8213-8484-8.
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