| With the gradual deepening in the reform of China’s economy and the rapid development in capital market, direct financing grows as well. However, comparing with the indirect financing, the proportion of China’s direct financing in the financing structure is still on the low level. Especially, there is a huge gap between the direct financing in China and that in the developed countries and emerging capital market. Meanwhile, after years of high-speed growth, China’s economy has reached a higher level and the deepening reform of financial system is essential to ensure the sustained stable growth in economy. As a result, this paper attempts to find some theoretical support for the reform of China’s financial system by analyzing the effect of direct financing towards the economic growth.Firstly, the mechanism of the direct financing towards the economic growth has been explored. Based on the summing of the economic function of the direct financing and combined with the endogenous growth theory, preliminary analysis has been conducted about the channels of direct financing promoting economic growth capital accumulation and technological progress. Then, by improving the normal endogenous growth, a theoretical model is introduced to prove that the direct financing can promote the economic growth through the channel of capital accumulation. At the same time, a technological innovation endogenous growth model which a "financial sector providing direct financing service" is included, has been built. By solving the stable rate of economic growth, it can be proved that direct financing can improve the rate of stable economic growth by technological innovation.Since the direct and indirect financing share some similar economic functions, the mechanisms which affect the economic growth of the both are consistent as well. Thus, it is not sufficient in-depth and thorough to study the effect of direct financing towards the economic growth only through action mechanism.As a result, from the perspective of comparing direct and indirect financing, the article analyzes the advantages and disadvantages of direct financing towards the economic growth relative to the indirect financing. At first, from the difference in the consumption of social resources, some improvements have been made to the endogenous growth model. From the analysis on the equilibrium, it is found that direct financing takes more advantages than indirect financing in the long-term economic promotion. By increasing the proportion of direct financing in the financing structure, the consumption of social resources in financial sector can be reduced, the total amount of productive capital can be increased and ultimately enhance the steady-state rate of economic growth.Further, in order to make the theory more closely to reality, this paper explores the advantages and disadvantages of direct financing toward the economic growth compared with the indirect financing from the perspective of information asymmetry. By building a simple "competitive economic system" model and analyzing the equilibriums under different information conditions, it is found that the development of direct financing will make the net output of the whole community grow by reducing the agency costs of the whole society. When the development of direct financing is relatively backward, develop the direct financing appropriately and enhancing the proportion of direct financing in the financing structure is conducive to the economic growth.Then, based on an analysis about the development of China’s direct financing, an empirical analysis about the theoretical conclusions of this article is conducted using the China’s economic data and a variety of empirical methods.For the test of direct financing promoting economic growth through the channel of capital accumulation, the article firstly conducts an empirical analysis on the factors affecting China’ s economic growth. And then, an empirical test of the relationship between direct financing and capital accumulation is made. The result shows that direct financing can promote the economic growth through the capital accumulation channel and such a transmission mechanism is existed in China.For the inspection of the theoretical view that direct financing promotes economic growth through technological progress, the article use the statistical methods of the previous scholars to measure the rate of technological progress in China from1981to2010, and then analysis of the contribution of technological progress to the economic growth is done. After that, an empirical test is conducted on the relationship between direct financing and the rate of technological progress. The result shows that in the21st century, the mechanism of "direct financing promoting economic growth through technological progress" is initially run effectively in China.On the test of theoretical view that direct financing has more advantages than indirect financing in enhancing the economic growth, the relevant data from1986to2010of China is used in the empirical test of the relationship between the change of financing structure and the rate of economic growth. The result show that at the present stage, it is helpful to increase the proportion of direct financing in total financing for enhancing the rate of economic growth.Finally, depending on the findings of this paper, several policy recommendations have been made for the development of China’s direct financing.In conclusion, this paper shows that at the present stage developing direct financing and increasing the proportion of direct financing in China’ s financing structure is much more beneficial for the economic growth... |
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