The Structure And Efficiency Of The Financial Path Transferring Savings To Investment In China

Since the beginning of economic reform, the savings rate in our country is very high and the savings scale is enormous. But the structure of transferring from savings to investment through the medium of financial institutions and securities markets is irrational, which directs a lot of saving money to inefficient state-owned enterprises, and the efficiency of transferring is inferior. There is some certain relations between it and the high speed economic growth with low efficiency during the reform. Therefore it is of great importance both in practice and in theory to study the structure and efficiency of the transferring from savings to investment during the period of our economic transition.After summarizing the explanation of transferring from savings to investment from the schools such as classicalism, neo-classicalism, Marxism, Keynesianism and development economics, this paper discusses in theory and explains the four ordinary stages of transferring from savings to investment.This paper analyses the forming mechanism of savings, its structure and the characteristics of its transferring to investment during the period of planned economy. It explains that the forming of savings and its transferring to investment under the planned economy were dominated by plan mechanism. In this mode, the savings rate was high and also was the transferring rate, but the transferring efficiency is low. This paper indicates that planned economy included the growth mode of government participating directly in economic development, which definitely results in low transferring efficiency. Since the beginning of reform, along with the high growth in national savings, its structure changed greatly. The ratio of resident savings to gross national savings grows remarkably, and the government savings ratio dropped notably. Comparing to the investment scale of each part, residents become the part of surplus, but enterprises and governments become the parts of deficit. Against the reform background of transition tomarket economy, it is a logical choice to transferring savings to investment mainly through the financial path other than the path of public finance, which balancing residents' savings supply with enterprises' and government's investment demand.In fact, the financial path includes the formal one and the informal one. The former is the main stream and the latter is of underground characters. Considering transferring through the formal financial path, in the aspect of subjects, financial institutions is the main body; in the aspect of forms, indirect transferring mode dominates it; in the aspect of instruments, savings and loans (contracts) is in the majority; in the aspect of flow directions, financing for state-owned economic units prevails. The transferring efficiency through formal financial path is quite low. The relationship between the transferring structures and its efficiency of formal finance is not in conformity with western classical theories, which reflects the characteristic of governments' power participating too deeply in the resource allocation in the economic transition period. The transferring structure and efficiency of informal finance is not totally the result of challenges among financial institutions, and it is, to a great extent, also the outcome of governments participating too deeply in resource allocation during the economic reform of gradualism and decentralization. This paper takes "south Jiangsu model" for example to analyse the relationship between the financial transferring efficiency and government power.The emergence and growth of informal finance as a pathway transferring savings to investment is related to the decentralization reform, "North dilemma" of government, and the asymmetric information between formal financial institutions and nongovernmental small-and-medium borrowers.The presence of informal finance objectively improves the efficiency of resource allocation in the whole society, which can be explained from the approach of "increment reform" theory. The informal finance has the characteristic of improving partly the efficiency of external resource allocation. Up to now, in some relatively developed regions, the external allocation of informal finance has shown the tendency of diminishing marginal efficiency. This paper takes "Wenzhou Model" as a typical example, and analyses the transferring efficiency of informal finance.It is ultimately depended on the reform of market economy system to improve theefficiency of financial transferring during our economic transition period. In recent days, the market-oriented financial reform should be hastened, which includes reforming the property rights of state-owned commercial banks and improving their governance structures; constructing and developing varied financial institutions and securities markets and opening diversified financing channels; pressing ahead with the market-oriented reform of interest-rate. In the long run, the institutional environment suitable for transferring savings to investment should be created during the construction of modern market economy, and it should be emphasized pushing forward government transformation and constructing the credit environment and the rule of law.