Economic Transition In China's Financial Development And Economic Growth

A study on the relation between financial development and economic growth is more challenging subject in economic theoretical research in recent years. The major content of this theoretical research is to answer following problems: In certain period what is the relation between financial development and economic growth, whether financial development can determine economic growth, or vice versa; Under the prerequisite of definite above-mentioned relations, subsequent problem is that how financial development is channeled to increase economic growth; After solving this , we need to answer what factors determine financial development ; financially, during the process of financial development in different countries, what is the relation between financial intermediaries development and stock market development, substitution or complement? Under such a theoretical background, this disquisition is to carry out more thorough analysis and explores on the relation between the financial development and economic growth during the transitional period of China economy, and put forward a series of policy conclusions.Theoretical model shows that financial development does affect economic growth through saving ratio, ratio saving channeled to investment and capital marginal efficiency . When foreign economist explored the relation between financial development and economic growth, they ignored the biggest developing country in the world-China, this is a defect; furthermore when scholars conducted studies on the relation between financial development and economic growth, they hardly took into consideration the relation between the financial development and microeconomic agents; Moreover, the economic condition among countries is different, financial development may affect economic growth through different ways. For example, while during the process of gradually transitional in China, finance upholds output increase and maintains macroeconomic stability, the laggard of financial reforming may retard economic growth in the future. In order to solve above problems , the paper mainly solve following problems: during the gradually transition in China, what is the role that finance played? What dilemma finance brought out while finance upheld economic growth? Whether the relation between financial intermediary development and stock market development is substitution or not? After answering above questions, we put forward a series of policy and suggestions.