The Research On Effects Of The Central Region's Financial Development On Economic Growth

The experience of various countries indicated that:the financial development is the important strut condition to the modern economic growth. With the monetization of the economy and the deepening of financial assets, finance has become the core of economic growth. In recent years, the central region's economy is relatively slow and its financial development can not be optimistic. This paper is to analyze economic and financial situation of the central region, and make comparative analysis with other regions. Studying the link between economic growth and financial development of the central region not only help to the research of China's regional economic and financial theory,but also benefit to draw up the effective regional economic and financial policies to promote economic development in the central region, thus facilitating a balanced development of the national economy.The article proposes the issue of the central region's financial development of economic growth on the background of central collapse and focus on the financial development on economic growth based primarily on the theory of economic growth and financial development.At first, the article describes the research background, and then on Sino-foreign related to sort out theoretical and empirical literature, focusing on the financial structure theory and the financial function theory. Most of the literature suggest that there is a positive relationship between the two, but causation is not clear; the study on the relation between the two of the domestic inter-regional is relatively lacking and do not reach a consensus.Secondly, the paper define and measure the concepts involved, summarize the financial development's effect on economic growth in three major ways with the perspective of financial capabilities and the integrated results of previous studies: firstly, financial development affect the savings rate; secondly, financial development promote savings into investment; thirdly, financial development to improve resource allocation efficiency.Secondly, the author compares the relevant indicators of financial development and economic growth rate differences between the central region and other regions by taking from the data of 1995 to 2009. With a large number of real data, shows that the central region relative to other developed areas there exists a gap in the financial level of development and economic growth, and the paper makes a fundamental judgments on the relations between the central financial development and economic growth:the central region's finance development is lack and the promotion for economic growth do not play the role fully. Then by studying the central region's specific targets of financial development and economic growth from 1995 to 2009, make analysis the relationship of the central regional financial development and economic growth specifically, and do regression analysis and Granger causality test to the two's variables, which verifies of the foregoing basic judgments. The next, make detailed analysis of reasons for the lack of the central region's financial development which is the basis of the policy research.Finally, the paper propose policy recommendations of the finance development in order to promote economic growth. This paper argues that:firstly, should improve the financial structure and establish the diversified financial institutions system; secondly, the government needs to play a role in macro-control and guide allocation of financial resources in reasonable; thirdly, to develop of small and medium financial and private finance and innovative financial instruments; fourthly, to improve the internal control system of financial institutions, establishing a modern enterprise system; fifthly, to optimize the financial environment, and enhance the credit rating of the central region.