Financial Restructuring And Economic Development From The Perspective Of Institutional Arrangements In China

The status of the financial system in the modern economy is increasingly important with the accelerated pace of economic and financial developments. In the real economy, there are huge differences in terms of the financial architecture in the world. How to understand these differences and their relationship with economic development, not only it is a very controversial academic topics, but also has a strong policy implications. In the related studies, there had been heavily argued around the relative importance and its impact on the system of financial structure of banking institutions and financial markets, there also had been discussed by a considerable number of scholars based on different analyzes about advantages and disadvantages of the different banking structures and financial market structure, however, these related studies had not reached the consistent point of view. Since the government institutional arrangements as a normal economic history of economic development, and its impact on the economic and financial operation can not be ignored, so this article re-examines the relationship between the adjustment of financial structure and economic development from the new perspective of the financial institutional arrangements.When analyzing the relationship between institutional arrangements and financial and economic operation in existing studies, it too much emphasized on the characteristics of the institutional arrangements that may affect the economic and financial development. However, in this paper, it appears that different institutional arrangements are not exactly the same and have their own advantages and disadvantages in the respect of financial savings mobilization, risk diversification, the role and pathways of capital allocation mechanisms, then just simply investigating the characteristics of the financial system may be difficult to determine what the financial structure more conducive to economic development. In order to more accurately analyze the relationship between financial structure and economic development, it is necessary to start from the characteristics of the financial system and the real economy structure. At different stages of the real economic development had differentiated demand for financial services, only financial architecture adapted to various connotations of economic development, which will maximize the function of the financial system and promote the effective development of the real economy. On the contrary, when financial architecture is incompatible with the need of economic development, then it may lead to inefficient operation of the financial system and further restrict the real economic development. Thus, in a given stage of economic development, how to adjust and optimize financial architecture, and promote the development of financial structure and adaptability of the real economy, is a rich topic of practical significance. Of course, financial architecture dependence on government institutional arrangements, also requested to adjust and optimize the financial structure in the same, which stresses the adjustment and reform of the financial system arrangements.In this paper, it gives a brief review on the theory of financial structure and economic development, and sketches out ideas about the full-text analysis through the relevant theoretical review in chapter II; In chapter III it firstly discusses the impact on the adjustment of financial structure and then discusses the intrinsic mechanisms of financial restructuring and economic development based on the level of government institutional arrangements. Considering the few existing studies systematically taken into account the intrinsic properties of economic development, this paper focuses on the connotation of economic development, which are total economic growth, economic restructuring and optimization, improving and enhancing economic quality, and further elaborates the mechanism of the relationship between financial structure and economic development respectively from the three dimensions, which are economic growth, industrial structure upgrading (high-tech industrial development) and regional economic optimization, then constructs theoretical models on the basis of the mechanism analysis. In chapter IV this paper designs index system to measure the financial structure and financial institutional arrangements, and draws comprehensive index factor of financial structure and index of financial liberalization, which lay the foundation for empirical analysis on the relationship between national and regional financial structure adjustment and economic development respectively from the two levels of economic growth and industrial structure from in chapter V to chapter VII. In addition, this paper also roughly analyzes the general trends and development characteristics of financial restructuring in China from the level of economic growth; the final chapter of this paper is a summary of the full text and policy recommendations through theoretical and empirical analysis of refraction, and points out simultaneously inadequate places and further research directions.Analysis conclusion shows that it achieves a dynamic role in relation to each other between financial restructuring and economic development by means of the appropriate intermediary, but there are differences in the mechanism under different financial institutional arrangements. Government institutional arrangements reduce the adaptability of financial restructuring and economic development, and the relaxation of financial institutional arrangements, which means that financial liberalization helps to adjust and optimize financial architecture, thereby improves the matching degree of financial structure and economic development, promotes the real economic development. Specifically, direct financing factor and indirect financing factor representing different constituents of financial structure can promote the overall economic development from three aspects of economic growth, industrial structure upgrading, and high-tech industry development, which has a greater role by indirect financing factor; in the relationship between regional financial structure and economic development, banking and securities industry have contributed to the regional economic development, but securities industry has more significant effect to enhance the economic level; improving the level of financial liberalization index, that not only helps to grow the level of total economy, but also contributes to the development of high-tech industries and the entire system of industrial structure, particularly to the development of the first industry. This analysis conclusion claims, that optimizes indirect bank-dominated financing model through interest rate market guiding dominant healthy development of shadow banking, and that accelerates direct stock market-based financing model building which guides and supports the healthy development of non-financial institutions and Internet banking; that focus on the balanced development of regional financial and regional economy, and enhances the positive role of regional financial architecture in economic development; that continues to promote financial liberalization, diversification of property rights to promote the development of financial mechanisms and financial markets, and reduces the adverse effects on government institutional arrangements in the economic and financial development; on industrial policy, that increases efforts to support private enterprises which promotes private capital flows between different industries and regions.