Book co-edited by ISU researcher examines emerging Chinese markets

March 1, 2010

The rapid expansion of financial markets in China offers great opportunities for investors, according to a new book co-edited by John A. Tatom, director of research for Networks Financial Institute at Indiana State University.

"China has experienced more than 30 years of supercharged growth, aggressive reforms and a new level of integration with the world economy, but few Western observers fully grasp the sweeping changes that are under way," Tatom said.

"China's Emerging Financial Markets: Challenges and Opportunities" is designed to help the reader understand the dynamics of China's economy, the ongoing evolution of its financial system, its new role on the global stage and its future opportunities. The comprehensive publication brings together analyses from 41 renowned financial and policy experts, more than half of whom are Chinese.

"The insights of these experts provide invaluable perspectives on the major economic growth story of our times," Tatom said.

The book is an outgrowth of "China: A Two-Way Street," a U.S.-China business conference conducted in Indianapolis in 2007 by Networks Financial Institute, an outreach of the Donald W. Scott College of Business at Indiana State, and China's Liaoning University.

According to the book, there is a delicate balancing act in the Chinese financial markets because of the ongoing development. The book examines the inner workings of China's financial institutions as well as its bond, equity and real estate markets, detailing how government policies and the process of privatization affect their performance.

"Both domestic and foreign investors are discovering new opportunities as the economy continues to open and financial services are expanded to an ever larger population," Tatom said. "China's spectacular rise means the stability of its financial system is of vital importance to the global economy. The government's approach to its role in the world and its expansion abroad will have far-reaching implications for years to come."

The book includes:
• Overview of the Chinese Financial System - A survey of the shifting landscape of China's financial system and its ability to promote growth. This section also examines the coexistence of the state-owned sector and the private sector.
• Monetary Policy and the Foreign Exchange Market -A summary of monetary policy procedures, a history of the People's Bank of China, an in-depth look at the rationale behind the rapid pace of foreign exchange accumulation and the connection between financial opening and the evolving foreign exchange market.
• The Banking System - A review of the regulatory approach needed to provide banking services to such a large and diverse population and geography. Also assesses prospects for future bank performance and development.
• The Bond and Equity Market - An analysis of historical and recent developments in China's securities market, privatization of state-owned companies, the emergence of shareholder protection and the impact of non-tradable share reform.

Co-editors of the book with Tatom were James R. Barth, a senior fellow at the Milken Institute and the Lowder Eminent Scholar in Finance at Auburn University, and Glenn Yago, director of capital studies at Milken.

About Networks Financial Institute: Founded in 2003 with a grant from Lilly Endowment, Networks Financial Institute at Indiana State University facilitates broad, collaborative thinking, dialogue and progress in the evolving financial services marketplace. Programs concentrate on financial literacy education, student programs and thought leadership.

Contact: John A. Tatom, research director, Networks Financial Institute at Indiana State University, and associate professor of finance, Donald W. Scott College of Business, 812-237-2011or john.tatom@isunetworks.org