Research On The Influence Of Financial Profit On Growth In China

To properly deal with the relationship between finance and real economy and to improve the quality of financial service entities is a major issue facing China's financial development and transformation.In recent years,with the rapid financialization of China,the financial industry has shown a trend away from the real economy.More and more attention has been paid to the phenomenon of high profits in the financial industry,while the profits of various entities have declined to varying degrees.The healthy development of the real economy is the foundation of economic growth.Will high financial profits harm economic growth?Existing research fails to provide a good answer.Finance and economic growth has been one of the most important topics in the field of economics and finance.Many scholars have deeply studied the relationship between finance and economy from the perspective of financial development and financialization,and the theoretical circle has basically reached a consensus that financial development promotes economic growth.But in the last decade,new empirical evidence shows that the relationship between financial development and economic growth is non-linear.Existing studies have made some conjectures about this,but the theoretical discussion is very limited,or the corresponding empirical evidence does not support it.Marx's exposition on monetary capital and industrial capital reveals the essence of financial operation: money capitalists transfer the right of monetary capital to industrial capitalists and share industrial profits.Inspired by Marx's discussion on the essential source of financial profit,this paper links Marx's idea of "financial-industrial profit sharing" with the literature on the relationship between finance and economic growth in western economics,and discusses the relationship between finance and economy from the perspective of financial profit.This not only provides a new analytical thought for "financial excessive phenomenon",but also expands and enriches the theoretical appeal of Marxist political economy.On the one hand,this paper answers the question of the essential source of financial profit and the relationship between financial profit and economic growth from the perspective of Marxist political economy.On the other hand,using modern econometrics method,this paper provides empirical evidence of the relationship between financial profit and economic growth based on China's national conditions from multiple dimensions,and establishes an analytical framework of the relationship between macro-financial profit evaluation and micro-enterprise characteristics and behaviors.This is of great significance to the broader issues of financial support for high-quality economic development in China and the establishment of institutions and mechanisms to effectively support the real economy.The main contents and conclusions of this paper are as follows:Theoretical research :(1)Discriminate and clarify the relevant concepts of this study.The discourse system of Marxist political economy theory is relatively abstract,so empirical research is difficult.Considering the possibility of theoretical convergence and quantitative convergence,in the part of theoretical analysis,the two key words involved in this study are firstly differentiated and clarified.First,according to the combing of the history of economic theory and Marx's related exposition,the connotation of "financial profit" is defined as the surplus value shared by the financial industry.In this paper,the ratio of financial profit to real profit is used to describe the problem of "bargaining power" in financial industry.This description way does not deviate from Marx's "labor theory of value".Second,by digging into Marx's thought of economic growth and fully considering the "epochality" and "dialectics" of Marxist political economy in the process of socialism with Chinese characteristics,the connotation of "economic growth" is clear,including the "speed","quality" and "quantity" of economic growth.Due to data availability and compatibility,the rate of economic growth is GDP growth rate;The "qualitative" aspect of economic growth is total factor productivity;The "quantitative" side of economic growth is the level of real investment.(2)The essential source of financial profit is industrial profit.Although the forms of modern financial business are complex,they are all covered in the laws of "lending capital","commercial capital" and "interest-bearing capital" in combination with Marx's relevant theories.The profits obtained from these three forms of capital are all derived from the profits of the sharing industry.(3)in-depth analysis of the reasons for upward deviation of financial profits.The higher profit of finance is determined by the profit of finance through industry selection and the distribution status of finance industry.Once the upward deviation of financial profit is formed,the financial industry threshold and the part that does not participate in the formation of average profit(interest-bearing capital part)jointly hinder the "average of financial profit in the whole society",so the financial industry can maintain a high profit for a long time.(4)Analysis of the relationship between financial profit and economic growth.There are three aspects.First,financial profit is conducive to collecting idle funds,accelerating the speed of socialized mass production and improving the speed of actual capital accumulation.However,excessive financial profit will accelerate the differentiation between monetary capital accumulation and real capital accumulation,and reduce the speed of real capital accumulation.Second,under the condition of benign interaction between the financial industry and the real economy,the pursuit of profit in the financial industry itself is a means to improve the efficiency of resource allocation and production efficiency.However,in the case of relatively high profits in stable finance and relatively low profits in entities,impatient capital is easy to flow to industries that realize profits quickly,resulting in resource misallocation and lower production efficiency.Third,the profit-driven financial capital is conducive to the accumulation of idle capital and can promote the investment in the real economy.However,the excessively high financial profit will affect the reproduction decision and actual investment demand of enterprises,and reduce the real investment of enterprises.Empirical research :(1)The influence of financial profit on economic growth rate has an optimal proportion.On the basis of theoretical analysis,taking 245 cities in 30 provinces of China as samples from 2007 to 2018,the dynamic panel threshold model is used to empirically test the relationship between financial profit ratio and economic growth rate.The results show that when the financial profit ratio is lower than 28.97%,with the increase of the financial profit ratio,the economic growth rate increases gradually.When the financial profit ratio is higher than 28.97%,the increase of the financial profit ratio will be detrimental to the economic growth rate.It is further found that the optimal proportion of financial profit and the influence effect of financial profit in different regional systems vary with the different economic structures in different regions.In the regions with strong stateowned economy,the real economy has a higher tolerance to financial profits,which is manifested as the optimal financial profits account for a relatively high proportion(44.94%).In regions with strong private economy,the tolerance of real economy to financial profits is lower,which is manifested as the proportion of optimal financial profits is relatively low(24.08%).(2)There is an optimal proportion of the impact of financial profit on TFP.On the basis of theoretical analysis,taking 185 cities from2007 to 2018 as samples,this paper uses the panel threshold model to empirically test the relationship between financial profit ratio and total factor productivity,and further analyzes the heterogeneity at the enterprise level.The results show that when the financial profit ratio is lower than 21.44%,financial profit will promote total factor productivity.However,when financial profit accounts for more than 21.44%,financial profit will reduce TFP.Further research finds that factor intensity can affect the non-linear relationship between financial profit and total factor productivity.Financial profits have less impact on labor-intensive enterprises.For both capital-intensive and technology-intensive firms,the financial profit under low zone system has a positive effect on TFP,while the financial profit under high zone system has a significant negative effect on TFP.Among them,capital-intensive firms are more tolerant of financial profits,as shown by a higher threshold(27%).In addition,the life cycle of a firm can also affect the non-linear relationship between financial profit and total factor productivity.Financial profit has little influence on mature enterprises.For firms in the growth stage,financial profit has no obvious effect on TFP under the low zone system,but significantly reduces TFP under the high zone system.For enterprises in recession period,the financial profit under low zone system can increase TFP,while the financial profit under high zone system can significantly reduce TFP.(3)There is an optimal proportion of the impact of financial profit on physical investment.On the basis of theoretical analysis,taking 241 cities from 2007 to 2018 as samples,this paper uses the dynamic panel threshold model to test the relationship between financial profits and real investment,and examines the channels through which financial high profits squeeze out real investment at the enterprise level.The results show that when the proportion of financial profit is lower than 27.76%,it is helpful to increase the real investment.However,when the proportion of financial profits is higher than 27.76%,high financial profits will crowd out real investment.Further research finds that financial profits can generate "crowding-out effect" on real investment by increasing the financial cost of nonfinancial enterprises and inducing enterprises to participate in shadow banking.On the basis of the above research findings,this paper points out that the financial profit in some regions of China is "too high",which has had a negative impact on the speed and quality of economic growth.At the present stage,the real economy risks are prominent and the growth is weak.Finally,it gives specific policy suggestions on how to reasonably plan the profits of the financial system to help the high-quality growth of the entity.It includes :(1)constructing the profit warning index system of the financial industry,monitoring the relationship between finance and entities from the perspective of financial profit,and preventing the negative problems that may arise from excessive financial profit from the source;(2)In view of the phenomenon that financial profit is too high in some regions,it puts forward corresponding short-term profit-giving measures for financial institutions;(3)Looking for scientific systems and mechanisms to ensure the coordinated development of finance and economy in the long term.