A Study On Financial Development And The Growth Of TFP

China's rapid economic growth mainly depend on a large number of factors input and not on total factor productivity gains achieved since 30 years reform and opening up, and therefore to achieve sustainable economic growth, As for factors input extensive mode of growth,many scholars believe that the extensive mode of economic growth is not sustainable with loss of low labor cost advantage and diminishing marginal returns to capital, but promoting the growth of total factor productivity can achieve sustainable growth, how to promote China's total factor productivity growth, many scholars explain the reasons for the growth of total factor productivity from different perspectives, but the existing research ignores the role of financial development on total factor productivity, especially for a large population like China, the low level of financial development, it is theoretical and practical signifiance to develop the right financial development strategy for our country and to promote the change of economic growth mode from the perspective of financial development to study the growth of total factor productivity issue.The thesis focuses on financial development and total factor productivity growth as the central basis. Based on the existing literature, first, the thesis introduces how to measure the index of financial development and total factor productivity. Because the measurement results of financial development and total factor productivity have a direct impact on the conclusion, So a precise measurement methodologies are necessary.Secondly, using stochastic frontier production function model to measure the total factor productivity growth, through the establishment the econometrica model of financial development and the growth of total factor productivity, the reasearch shows that two indicators of financial development only financial deepening has significant role in promoting the groowth of total factor productivity, but the degree of finaical intermediation is not conducive to the growth of total factor productivity. And then using the data envelopment analysis measure the total factor productivity changes, and set the same econometrica model between financial development and the growth of total factor productivity, the same conclusion as stochastic frontier model. Thirdly, based on the relationship between financial development and the growth of total factor productivity, the thesis further study the relationship between financial development and the three parts of total factor productivity, the growth of total factor productivity can decompose into technical efficiency change, technological progress and scale effect changes through a certain method, in other words, to study the relationship between financial development and technical efficiency changes, financial development and technological progress, financial development and scale effect changes. The purpose is to find out financial development making an impact on which part of the growth of total factor productivity since financial development promotes the growth of total factor productivity. The results show that the relationship between financial development and technical efficiency changes is negative, and financial development doesn't promote the growth of toatal factor productivity through technical efficiency improvement. What's more, there isn't correlationship between financial development and scale effect changes. So financial development promotes the growth of toatl factor productivity through technological progress, the contribution of 70% or more total factor productivity is technological progress, which explains the growth of total factor productivity depends on technological progress. In the analysis of the relationship between financial development and technological progress, the research shows that the two indicators of financial development only financial deepening is conducive to technological progress, and the degress of financial intermediation monopoly is not conducive to technological progress, the same conclusion as the relationship between financial development and the growth of total factor productivity.Finanlly, wheather from the perspective of the macro or industry level on the relationship between financial development and scale effect changes, the correlation between financial development and scale effect changes doesn't exist. Which further illustrates financial development to promote the growth of total factor productivity through the path of technological progress.