The Optimal Financial Structure: Theory And Empirical Research

Financial structure is the composition of elements, the relationship between thefinancial system and its volume ratio，they mainly includes the financial institutions(industry) structure, financial market structure and price of a financial asset structure.The role of the financial in economic growth and development has reached a consensus,however, the relationship between financial structure and economic development is stillin controversy, the research in Financial structure has developed for nearly half a centurysince Gold Smith’s research, it have an immense number of books. From “the financialstructure dichotomy”,“theory of financial services”,“theory of financial law”,“thetheory of financial function”,“theory of financial structure optimization”, the domesticand foreign scholars efforts to adds a powerful argument for the relationship betweenfinancial structure and economic development from different perspectives. There aresome problems still to be solved, for example, What kind of financial structure is themost beneficial to economic development? the existence of the optimal financialstructure? What is The orientation of financial structure optimization? What is theunbalance financial structural? How the financial structure imbalance degree? What iseffect of the unbalance financial structural impact on financial stability? These problemsin the past literature there is no clear answer, or not enough in-depth studied，but “thetheory of optimal financial structure” can make a more accurate answer to this question.Lin put forward the optimal financial structure theory that is a new theory, it is a newfield of financial structure research. The theory of optimal financial structure is abreakthrough, development and complement of traditional financial structure research,however, the research is still in preliminary stage, the theory of optimal financialstructure is still imperfect, and lack theoretical and empirical research. This article isbased on the improved within the framework of optimal financial structure theory, usingthe modern economic analysis tool, by building a new optimal financial structure theoryframework to explain the function mechanism between financial structure and economicdevelopment. This paper build a model of optimal financial structure theory, and carry onthe empirical analysis, trying to answer around financial structure unsolved problems inprevious research. This article answers the question of whether the optimal financial structure exists, the optimal financial structure dynamics and related questions ofdeviating from the optimal financial structure, deviation from the optimal financialstructure affect economic growth? And applying the optimal financial structure theory inChina, analysis of the impact of China’s financial structure deviating from the optimal,How to avoid or reduce the negative impact of deviating from the optimal financialstructure, etc.The second chapter is theory origin of the optimal financial structure. It Mainlysummary and the carding the research literature of financial structure.The third chapter is the theoretic analysis of optimal financial structure. Based ontheoretic origin of the optimal financial structure, this chapter constructs the theorysystem of the optimal financial structure. The system mainly includes the followingaspects: the model of optimal financial structure theory, the optimal financial structuredynamics,the deviation of optimal financial structure,the optimal financial structureoptimization and adjustment.The fourth chapter is the empirical analysis of the optimal financial structure. Thissection is based on theoretical analysis of the third chapter, Use multinational sampledata for empirical analysis, attempt to find out the corresponding empirical evidence tosupport the research of theoretical perspectives. Through the empirical test shows that:1.A country exists the optimal financial structure in its economic development process,There are "inverted U" type of relationship between financial structure and economicdevelopment;2.As the legal, cultural, political, religious, economic, financial and otherfactors change, the optimal financial structure dynamically move, so each economy hasits own optimal financial structure. And we design the estimate model of optimalfinancial structure by the endogenous growth model, then, Calculated the optimalfinancial structure of the United States and Germany by it.The fifth chapter is the optimal financial structure deviation affect financial stability.This section is based on theoretical analysis of the optimal financial structure deviation,design the indicators of degree of deviation from the optimal financial structure, then,empirical analysis combined with33countries in1989-2009panel data. We found thatthere is the negative relationship between the optimal financial structure deviation andfinancial stability. With the growing degree of deviation from the optimal financial structure, the probability of bank crisis and financial crisis Increase, financial stabilitywill drop, financial risk will increase.The sixth chapter is the optimal financial structure research of China. First of all,this section using statistical methods descriptive analysis financial structure of China, andestimates China’s optimal financial structure. On this basis, we build the model ofoptimal financial structure deviation influence economic development, analysis financialstructure that deviate from the optimal how to effect economic development. The resultsshowed that, as China’s financial structure deviating from the optimal, China’s economicdevelopment levels reduce. Then, the model add exogenous shock variable, we will bringfinancial regulation, economic structure, degree of financial liberalization,the legalsystem into the model for empirical analysis. The results show that, effective financialregulation, adjustment of economic structure, deepening of financial marketizationdegree and the perfection of legal system will Minimize negative effects caused by theoptimal financial structure deviation.The seventh chapter is policy recommendations of China’s financial structureoptimization. Based on the empirical analysis of China’s financial structure, we discussthe problems of China’s financial structure, and put forward the correspondingcountermeasures and Suggestions for The optimization of China toward the optimalfinancial structure and adjustment.