Research On The Mechanism And Efficiency Of China's Financial Development On Economic Growth

If the economy is the body,then finance is the blood.Only when the blood flow is smooth,the body of the national economy can continue to grow and develop healthily and steadily.Finance is a double-edged sword.It has both positive and negative effects on the growth of the real economy.If finance serves the real economy with multiple functions,it will promote the growth and development of the real economy.If financial development and the real economy are out of synch,unsynchronized,uncoordinated,or even financially "prance","self-entertainment",or sooner or later will certainly counter the fruits of economic growth and development.In recent years,China?s finance has experienced the phenomenon of “de-reality and emptiness”,which has painfully hurt the real economy.The statistical indicators related to financial development,such as the yearly monetization rate(M2/GDP),also show the seriousness of the problem.On February 22,2019,General Secretary Xi Jinping,when presiding over the thirteenth collective study of the Political Bureau of the CPC Central Committee,proposed for the first time to deepen the structural reform of the financial supply side.He stressed that We should deepen our understanding of the international and domestic financial situation,correctly grasp the nature of finance,deepen the structural reform of the financial supply side,balance the relationship between stable growth and risk prevention,and resolutely lay a good job in preventing and resolving major risks including financial risks,strengthen the real economic capabilities of financial services,and promote the healthy development of China's financial industry.It is in this context that the author chooses "China's financial development plays a role in the mechanism and efficiency of economic growth",trying to explore in depth the mechanism of China's current indirect financing and direct financing for economic growth and efficiency problem.Obviously,this is a relatively urgent and important issue that China needs to solve urgently.The research in this paper includes the following seven parts:Chapter 1 is an introduction.This chapter introduces the background and significance of the selection of topic,and reviews and summarizes the relevant literature.The review is divided into four major parts: the connotation of financial development,the relationship between financial development and economic growth,the research on the economic growth mechanism of financial development,and the research on the economic growth efficiency of financial development.This chapter also briefly introduces the research content,ideas and methods of this paper,as well as the innovation and deficiencies of this paper.Chapter 2 is the theoretical basis and theoretical framework of this paper.After introducing some basic concepts and categories,this chapter expounds the evolution of financial development theory and the evolution of economic growth theory.Then it draws on the endogenous growth model of scholars such as Romer and Lucas to divide the financial sector into direct financing.The department and indirect financing were introduced into the model,and a model of economic growth embedded in two financial sectors was constructed.The model was dynamically optimized and analyzed by economic steady state,and then the parameters selected by the model were calibrated.The model was simulated and the meaning of the parameters was characterized.The results achieved in this chapter are that creatively constructing a dynamic optimization economic growth model embedded in two financial sectors,and that filtering out the impact on economic growth rate,technology growth rate and capital accumulation growth rate.Therefore,it can influence the two major parameters of the mechanism and efficiency of financial development on economic growth in different directions and degrees,and find the steady-state solution.This infers the theoretical framework for analyzing the effects of financial development on economic growth in different financing methods of indirect financing and direct financing.Chapter 3 is an analysis of the mechanism and efficiency of financial development's role in economic growth.This chapter is still a theoretical analysis.Firstly,it distinguishes between indirect financing and direct financing.Then it analyzes the mechanism of financial development in economic growth for both indirect financing and direct financing.Among them,the economic growth mechanism is further subdivided into a quantitative action mechanism and a quality action mechanism for analysis;Then it uses game theory and other methods to compare the effects of indirect financing and direct financing on endogenous economic growth,and analyzes the differences in the mechanism of financial impact on economic growth;Finally,a theoretical analysis of the efficiency of financial development in economic growth has been carried out.The results of this chapter are preliminary derivation of two theoretical hypotheses:(1)in the initial stage of economic development,the quantitative mechanism of action promotes economic growth better,(2)in the advanced stage of economic development,the quality mechanism of action is better Promote economic growth;It promotes the role of several important parameters of two major categories on the efficiency of financial development in economic growth,and further theoretically inferred that the value characteristics of these parameters will inevitably lead to the emergence of financial resources in China.It is easy to "disconnect from reality" and the real economy is prone to zombie enterprises.Chapter 4 is an empirical analysis of the mechanism and efficiency of China's financial development in economic growth: indirect financing angle.This chapter uses the panel model and large sample data to empirically test the mechanism of China's financial development acting on economic growth from the perspective of indirect financing.It proves that in the indirect financing channel,financial development promotes the technological innovation of the enterprise through the accumulation of capital and promotes economic growth;this chapter also builds the SFA(random frontier)model to test the efficiency of China's indirect financing on economic growth,and draws affirmative conclusions.At the end of this chapter,through empirical analysis,it is verified that China's indirect financing development plays a role in the two shortcomings of economic growth,namely,financial resources are easy to “de-real” and the real economy is prone to zombie enterprises.This chaper also uses logit and other methods to build an application-worthy model that can effectively identify zombie companies in a timely manner.Chapter 5 is an empirical analysis of the mechanism and efficiency of China's financial development in economic growth: direct financing angle.This chapter uses the panel threshold model and large sample data to empirically test the mechanism of China's financial development in economic growth from the perspective of direct financing,and proves that in China,the direct financing path of financial development(equity financing)has a good promotion of economic growth.The mechanism is smooth;this chapter further uses the spatial panel model,using data from 31 provinces and cities in China for nearly 20 years,and empirically proves that in China,there is a significant causal relationship between the financing scale of the equity market and technological innovation of enterprises,which proves Direct financing of equity financing has a good mechanism to support economic growth;in addition,this chapter further uses the SFA model to prove that in China,as the scale of equity financing continues to increase,the efficiency of direct financing in economic growth is also increasing.Chapter 6 is the experience of the financial development of the United States and Japan in supporting economic growth and its reference.This chapter expounds the experience of the United States in supporting economic growth,as well as the experience of financial development in Japan in supporting economic growth,and on this basis,the good practices and experiences of financial development in the United States and Japan in supporting economic growth.It is summarized and used for reference.Chapter 7 is the conclusion,policy recommendations and research prospects.First of all,from the previous article,mainly from chapter 2 to chapter 5,this chapter summarizes and abstracts six main conclusions.Then,the guiding ideology of policy recommendations are put forward.We should vigorously deepen financial supply-side structural reform,promote financial development,and promote the stable and efficient growth of the real economy.Furthermore,some countermeasures and suggestions are put forward to break the supply-side structural imbalance of the financial market system,reform the existing financial supervision system and system,build a new cooperation model of science and technology enterprises plus financial institutions,and further improve the multi-level capital market.Finally,according to the shortcomings of this paper,the author puts forward the prospect of further research in the future.