Friday, May 18, 2007

Janet Yellen on Chinese Economy

For all of those who have doubts about the high investment rate in China and worry about the quality of those investments (and these investments' impact on bank soundness):

..."Economists with whom we met at some multilateral institutions have observed that a substantial share of investment is financed not by banks but by firms from their own internal funds; in other words, enterprise saving is very high. This suggests that the high pace of investment poses fewer risks to the banking sector than it might otherwise..."

This is from Janet Yellen at the San Francisco Fed, read the whole thing here. Janet of course is the wife of Nobel Prize winner George Akerlof.

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