Correlational Analysis Of China Capital Allocation And Financial System

Financial development theories believe that the financial system can influence the proportion of translating savings into investment to affect economic growth. And the efficiency of capital allocation has played such functions, in the high capital returns or optimistic prospective industries (item) continue to invest, in low-return capital or pessimistic prospective industries (item) timely cut flows in order to achieve the optimal allocation of capital.According to Jeffrey Wurgler (2000) method, the paper makes quantitative description of the efficiency of capital allocation, using years 1991-2003 China's 39 industries related data analyze our country's capital allocation efficiency.Where, I is net fixed capital formation, V is the value added of industries, i is the number of industrial, t is the year,ηt is the flexibility changes of fixed capital formation on the industry growth, denoted the level of flexibility of change capabilities on increasing the investment in the optimistic prospective industries and reducing the investment in the pessimistic prospective industries.Capital market is a major part of financial system. According to the mobility of financial instruments, capital market can be divided into long-term loan market and the securities market, which is divided into the...