Introduction:

The peculiar interrelationship between China’s financial system and the dramatic expansion of the Chinese economy during the recent thirty years constitutes one of the final riddles in the academic discourse on the foundations and driving forces of China's "economic miracle". Especially from the perspective of the mainstream law, finance & growth–literature the Chinese growth story remains shrouded in mystery. Taking this school's assertion, that the capacity for growth and development of an economy hinges on the quality of its financial system, as a benchmark and comparing this with the Chinese reality of a desolate financial sector, burdened with a deficient regulatory framework, lacking human capital and persisting political interference in lending and capital market activities, the Chinese economy should have hardly grown at all. Against this paradoxical setting the paper tries to shed some light on the growth promoting role of China's financial system by focussing on its formal and, in particular, informal institutional foundations. In order to do so, section 2 will provide a short discussion of the alleged paradox arising from employing standard law, finance & growth analysis on the case of China. Proceeding from these insights section 3 and 4 strive to establish a holistic view on China's financial system covering governance institutions that extend beyond legal rule enforcement. While section 3 is mainly concerned with some general considerations on and classifications of financing technologies, in section 4 we focus on the analysis of specific lending technologies and channels constituting the Chinese financial system. Section 5 concludes the discussion by highlighting some key insights.