A Research On Economic Development Stage,Financial Structure And Economic Growth

It is the duty and purpose of the financial industry to serve the real economy,but whether there is an optimal financial structure to serve the real economy has always been an important issue in theory and practice.From the middle of the 20th century,the economists around the world have found that finance plays a key role in economic growth.Some early research considered that:"the depth of financial development" is the main factor that affects economic growth which has nothing to do with " financial structure".In the 1990s,two financial structures:"market oriented" and "bank oriented" were proposed to divide the financial system.They try to find a "financial structure" that is more suitable for economic growth.However,the jury is still out.The new structural economics,which emerged in twenty-first Century,believes that under any economic development stage,the factor endowment and structure of this stage are given,which determines the optimal industrial structure and enterprise scale distribution of this stage.Therefore,the financial structure that can support the optimal industrial structure and meet the needs of enterprise scale is the optimal financial structure.This provides an angle and direction for re examining the financial structure.Essentially,in different "financial structure" arrangements,financing methods and enterprise size,financing efficiency and risk management are considered to be significantly different,resulting in different "financial structure" arrangements,its role in economic growth is significantly different.It is precisely according to the above-mentioned development context of the theory of optimal financial structure,this paper mainly discusses whether there is a non-linear relationship between "financial structure" and "economic growth" in different stages of economic development from two different perspectives.Firstly,this paper empirically examines the relationship between financial structure and economic growth from two perspectives of "stock market and banking" and "banking structure"using dynamic GMM method,using China’s provincial panel data from 2006 to 2015.Secondly,this paper empirically examines the relationship between financial structure and economic growth from the perspective of "stock market and banking industry".Using panel threshold model and three indicators of financial structure scale,financial structure vitality and financial structure efficiency,this paper empirically examines the non-linear relationship between "financial structure" and "economic growth" in different stages of economic development.Finally,from the perspective of "banking structure",this paper uses panel threshold model to benefit.Using two indicators of the proportion of small and medium-sized banks and small banks,this paper empirically tests the non-linear relationship between "financial structure" and"economic growth" in different stages of economic development.The main conclusion of this paper is that under the framework of "bank-led"financial structure,China’s stock market and banking industry should not blindly catch up with developed countries.According to the different stages of economic development,their own needs and the existing problems at this stage,we should arrange and adjust the "financial structure" that matches the real economy in a timely manner.The main contributions of this paper are as follows:First,in terms of research perspectives:A new explanation for "optimal financial structure" is provided in this paper according to the internal relation between"financial structure" and "economic growth".In the past,mainstream theories generally used developed countries as models to guide the financial structure of developing countries,and such reforms often ended in failure.The main reason for the failure of reform was that it did not take into account the fact that developed and developing countries were at different stages of economic development,so their financing needs were different.This paper argues that only the "financial structure"that meets the financing needs of the real economy is the optimal strategy at any economic development stage.Therefore,starting from the stage of economic development,this paper will look for the "optimal financial structure" which is appropriate to the stage of economic development.Second,in terms of empirical methods:in this paper,through the use of the panel threshold model,the non-linear relationship between "financial structure" and"economic growth" can be identified internally at different stages of economic development.It provides a quantitative basis for the formulation of financial structure policies in various regions of China where regional development is very unbalanced and in rapid transition.China’s various regions can formulate dynamic financial structure policies according to their respective economic development stages.Thirdly,in terms of economic mechanism:The internal correlation mechanism between financial structure and real economy is tried to identify in this paper.Most of the past studies only evaluated the correlation between financial structure and real economy from data and statistical significance,but the internal mechanism of the correlation between the two was rarely discussed.This paper finds that different factors endowment at different stages of economic development lead to different requirements for financial services in the industrial structure,enterprise scale and enterprise characteristics at this stage.Specifically,from the perspective of "stock market and banking",in different stages of economic development,"financial structure’ needs to match factors such as factor endowment and industrial structure in this stage,and effectively promote the development of real economy.From the perspective of "banking structure",in different stages of economic development,"financial structure" needs to be matched with such factors as enterprise scale and enterprise characteristics,so as to meet the financial needs of enterprises and promote the development of real economy.Finally,in terms of research results:In this paper,it’s found that some results in the sample interval seem to be inconsistent with China’s policies of promoting the development of the stock market and small and medium-sized banks.For example,in the financial structure from the perspective of "stock market and banking",the increase in the proportion of stock market scale to the assets scale of banking industry does not promote economic growth.In the perspective of "banking structure",the increase of the proportion of assets of small and medium-sized banks in the banking industry does not increase the economic performance.However,after careful analysis,the conclusion of this paper is not contrary to China’s economic policy.The main reasons are as follows:Financial structure based on the perspective of "stock market and banking".When the economic development is at a low stage,the increase of the proportion of the stock market to the banking assets will restrain the economic growth;when the economy grows to an advanced stage,the increasing proportion of stock market size relative to the size of banking assets has greatly reduced the degree of inhibition to economic growth.By analyzing the trend of empirical results,the inhibiting effect of stock market development on economic growth gradually weakens,which indicates that China’s policy of vigorously developing stock market is correct.However,while the stock market is developing vigorously,many problems in the stock market should be solved quickly,so that the development of the stock market can better serve the real economy.Financial structure based on the perspective of "banking structure".When the economic development is at a low stage,the increase of the asset scale of small and medium-sized banks in the banking industry will restrain the economic growth;However,when the economy develops to a higher stage,the proportion of assets of small and medium-sized banks in the banking industry increases,thereby increasing the degree of inhibition to economic growth,but it is not obvious.This indicates that with economic growth,the banking structure is more inclined to be dominated by large banks,which is consistent with the above theoretical analysis.The main reasons are:Banking structure is related to enterprise scale.Large banks serve large enterprises and small and medium banks serve small enterprises.When the economic development is at a low stage,the enterprise scale is relatively small,and the small and medium-sized banks are more able to meet their financing needs.When the economy develops to a higher stage,the enterprise scale is relatively large,and the small and medium-sized banks cannot meet their financing needs,while the big banks can.Finally,with the continuous development of economy,the scale distribution of enterprises has been changed from small enterprises to large enterprises,and the banking structure has been changed from medium and small Banks to large Banks.On the contrary,after the founding of the People’s Republic of China,the economic development strategy was to give priority to the development of heavy industry,so the distribution of enterprises was mainly large enterprises,and the corresponding banking structure was also dominated by large Banks.With the reform and opening up and economic development and the rise of China’s private economy,the financing needs of these small and medium-sized enterprises cannot be met,while the big Banks cannot support the financing needs of small and medium-sized enterprises.Therefore,it is right for China to propose to develop small and medium-sized banks in order to perfect the structure of China’s banking industry and provide strong support for the development of small and medium-sized enterprises so as to promote the healthy development of the real economy,which is a policy behavior to make up for deficiencies.However,in the process of rapid development,the small and medium-sized Banks are faced with many problems,such as blindly pursuing the expansion of asset scale and not truly serving the development of the real economy.It is embodied as follows:on the one hand,funds have been idling in the financial system;on the other hand,funds have not entered the competitive and efficient industrial sectors.