This paper addresses the questions related to the cost of China’s bank restructuring and how it has been financed. We first propose a framework for recognising losses. Then, we examine the recent major moves by the Chinese government to repair the country’s bank balance sheets. Finally, we explore the implications of the Chinese ways of funding the bank restructuring. We find that the Chinese government has been decisive in confronting the costly task of bank restructuring. Looking through the elaborate funding arrangements adopted so far, the Chinese taxpayers have paid most of the bill.
Bank restructuring; recapitalisation; non-performing loans; China
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