The Theory And Empirical Survey On Financial System And The Development Of Economy

In the Arrow-Debreu's general equilibrium model of classical economics, financial system is absent and of course, cannot influences the development of economy. But in the different countries of real world, there exists different financial systems. This paper focuses on this paradox and surveys the literatures on financial system. Circling around the function of financial system, this paper reveals the effects of financial system from three aspects as following: increasing the input of producing factors, boosting the efficiency of producing and sharing risks. In fact, the two parts of financial system, ie, financial intermediary and financial market, both have unique mechanism to promote economy. So the close-knit unit of these two can reinforce power of both and act on economy more efficiently. On the basis of financial theory, the paper investigates the relationship between financial system and economy of our country empirically and found that there exists remarkable positive relationship between financial intermediary and economy. But the same rule cannot be found in the relationship between financial market and economy. According to the theory and empirical analysis, the paper finally puts forward some suggestion about the development of our financial system.