Empirical Study On The Relationship Between China Regional Financial Development And Investment In Fixed Assets

Financial development is an integrated process which involved financial system dynamic change. It can enhance operating efficiency of financial intermediaries and financial markets, then improve investment environment, optimize capital allocation.The empirical analysis on regional financial development is a new researching angle which can provide more evidences for theory evolving. Furthermore, this kind of empirical research can also provide constructive suggestions for regional planning and macroeconomic management.This dissertation focused on the empirical analysis on Chinese investments in fixed assets through the view of regional financial development. Researching is composed of two parts, one is to construct a series of indicators of descriptive analysis which can measure Chinese regional financial development, efficiency of financial system and investments, and another is to analyze the relationship between China regional financial development and regional investment. The second part is implemented by using panel data models, such as panel unit root tests, Pedroni panel cointegration test and FMOLS estimation, dynamic panel data of GMM estimation.The conclusion of empirical analysis is as follows:Chinese financial system is experiencing speedy increase, regional financial intermediaries and financial markets make rapid progress, however, the efficiency of financial system is still low.Chinese regional investments contribute greatly to regional economic growth, but the efficiency of investments does not make any significant improvements.Chinese financial system contributes to regional investment and capital formation, but it does not boost the enhancement of regional investment efficiency.In the west of China, there are more evidences of the supporting to investments from financial system than in the east of China. Otherwise, in the east of China, the fund sources of investment in fixed assets are diversified, which have more shares of endogenous financing and foreign investment.The relationship between regional investment and saving absorbed by local financial intermediaries is consistent, which implies the transmission mechanism of financial resource to fixed assets is stable. On the other hand, it also implies the regional capital segmentation, especially in the west of China.In the short time, Chinese regional capital formation relies more on financial factor than on other factors. Most provinces have a self-constraint investment mechanism. The financial influences on the fix capital formation between regions or provinces are different, which also imply there might exist regional capital segmentation in China.This dissertation has following contributions:I. By researching investment, efficiency of investment and capital formation in the frame of Chinese regional financial development, this dissertation measured the degree of influence which regional financial intermediaries'saving and loan produced on regional investment.II. Constructing a series of statistical indicators, this dissertation measured the level of Chinese regional financial development and investment, efficiency of financial system and investment, and made horizontal and vertical analysis in a local view.III. Based on the integrated macro and micro researching angel, this dissertation made regional comparisons in details. On one hand, macro level research was carried out by using yearly inter-provincial data; on the other hand, micro level research was carried out by using monthly intra-provincial data which contained of 36 industries in every province.IV. This dissertation also applied a series of new econometric methods, which contained of panel data unit root test, Pedroni panel data cointegration test, group mean Fully Modified OLS estimation and dynamic panel data model based on GMM estimation.