Research On Financial Development And Economic Growth

As an important mechanism in the allocation of funds,financial development is a critical force to promote the sustainable growth during the technological revolution.Researches on the financial development and economic growth have been the most fruitful area of economics,such as financial structure theory,financial deepening theory,and financial constraints theory.At present,researchers' concerns penetrate from the macroeconomic analysis to micro-behavior selections.Based on the technical background of "General Purpose Technology",from the financial structure development perspective and the financial market efficiency perspective,under the neo-classical and endogenous growth theory framework,this paper uses dynamic equilibrium,empirical analysis and numerical simulation methods to analyze the impact of financial development on economic growth,focusing on the difference in the financing behavior between the emerging sector and the traditional sector.The research items include the origin and influence of the difference in growth between the traditional and emerging sectors on the arrival of new GPT,the dynamic system of"financial development-industrial structure change-economic growth" under the framework of neo-classical and endogenous growth theory.How will financial development change allocation efficiency and industrial structure,and promote economic growth under the new GPT technology?In order to clarify and answer this core issue,this paper answers the following questions in detail by theoretical and empirical work:(1)Are traditional and emerging sectors different in their growth characteristics under the new GPT?What is the source of the differences?How will the differences affect industrial structure and economic growth?(2)Are there any differences in the loan demand of traditional and emerging sectors?If there are,how will the banking competition affect the output by changing sector growth and industrial structure?(3)Are traditional enterprises and emerging enterprises different in their preferences of financial products?If so,how,will the financial market efficiency affect the growth of traditional and emerging sectors,as well as industrial structure and economic growth?In order to solve the above problems,this paper will carry on the research work in accordance with the following thought.Firstly,this paper constructs the microscopic selection mechanism of the technological progress pattern in the traditional and emerging sectors during the process of GPT diffusion.The theoretical analysis reveals that GPT plays an imbalance role between traditional sector and emerging sector,which makes them different in the technical progress patterns and scale structures.Emerging sector growth depends on R&D and inno vation,while investment is an important growth factor in traditional sector.The ratio of young and small enterprises in the emerging sector is greater than in the traditional sector.Using the cross-sectional data at the enterprise level,the empirical results support the theoretical hypothesis.The difference is introduced to the dynamic mechanism of economic growth.The simulation results show that the difference leads to the nonlinear fluctuation of economic growth,where the first stage is of the "V" shape fluctuation,the second is the high growth stage,and the third is the "technical bonus depletion" stage with low growth rate.And different kinds of financial developments have different effects.The financial developments,which are favorable to traditional sector,promote technological progress in the traditional sector and reduce the equilibrium output.The financial developments,favorable to the emerging sector,will increase the equilibrium output and the depth of economic volatility.Then,based on the differences between the traditional and emerging corporate loan behavior,by introducing a banking sector with capital allocation function in the neoclassical growth model,this paper constructs the three-sector dynamic equilibrium theory model to analyze the relationship among the banking competition,the production structure,and equilibrium output.Due to greater uncertainty,the emerging corporate loans are less flexible to replace than the traditional,which makes the emerging corporate loan' s elasticity of substitution is lower than the traditional.So the production structure interacts with the banking industry.Policy analysis finds that the entrance regulation,which is much more binding under the production structure of a single emerging sector than the production structure of a single traditional sector,reduces the financial market productivity and the surviving number of financial institutions,Appropriate maximum deposit rate regulation has a "stabilizer" role in mitigating the volatility of financial markets and output.And the numerical simulation analysis shows that both improving the banking competitiveness and changing the production structure are necessary for China to realizing the income level of developed countries.Finally,based on the micro-mechanism analysis of financial products preference in the traditional and emerging sectors,the paper puts forward the theoretical models of industry structure and economic growth both in a close economy and in an open economy.After using the cross-country panel data to testify the theoretical propositions,the dynamic numerical simulation is carried out.The results show that traditional and emerging sector enterprises have different financial product preferences.Emerging sector enterprises prefer equity to debt.In contrast,the traditional prefer debt to equity.Equity financial market efficiency has a threshold effect on the expansion of emerging sector.Only when the equity financial market efficiency is higher than the threshold,the improvement of equity financial market efficiency can improve the inno vation' s contribution ratio and balanced growth rate.Moreover,the open policy will helpful to increase the emerging sector' s contribution to economic growth.the simulation results show that under the comparative advantages,the "replace birds in the cage" policy in the eastern region and the "industry undertaking" policy in the western region will accelerate the agglomeration of regional industries and increase the equilibrium growth rate,but will increase the gap of regional income.A modest reduction in savings rates can increase the emerging sector contribution to economic growth and promote the transformation to innovative growth without changing the equilibrium growth rate.However,due to the limitations of analytical tools and methods,this paper simplifies the corporate behavior and financial development for a certain degree.In the future,based on the analysis of micro-cases,I will try to explore the possibility of multiple competition equilibrium between traditional and emerging sectors and the impact of financial development on multiple competition equilibrium.In the empirical analysis,I will try to build the dynamic stochastic general equilibrium system of financial development,industrial change,and growth,in order to make more comprehensive explanation and more accurate simulation.