Empirical Study Of The Relationship Between Financial Development And Economic Growth

Since the adoption of reform and opening policies, China's economy has made remarkable achievement. And these achievements benefited from the sustainable and steady development of the financial system. However, financial system in China exposed some problemes with the rapidly developing. The subprime crisis brought to China's financial system huge impact, and seriously affected the growth of China's economy. So, China has been forced to reconsider the relationship between financial development and economic growth, and relocate the reform path of financial development. Academic circles have made many researches, but the theoretical researches were insufficient, and not pointed, but most empirical researches had less guidance because of bad accuracy. Therefore, considering requirements of China's financial development and sustainable economic growth, this paper will has an important practical and strategic significance to further study the relationships between China's financial development and economic growth.The main research process of this paper is: First to card and redefine the connotation of financial function, financial development and economic growth, to provide category for below analysis; Second to card and analyze existing research results of financial development and economic growth, to provide theory and empirical basis for below analysis; Third to decompose financial development, then to build a comprehensive evaluation index system of China's financial development and measure composite index of financial development, and do trend analysis, to provide data and theoretical foundation for below empirical analysis; Fourth to empirically analyze the relationships of financial development, financial components and economic growth, to provide empirical basis for indicating the direction of China's financial development.The main conclusions of this paper are: First, financial function is the important means to promote the development of finance system and economic growth, China must correctly understand its connotation to expand the financial function and optimize the transmission path; Second, the accurate measure of comprehensive level of financial development is the foundation of further research, China should continue to improve the comprehensive evaluation index system of financial development, and precisely gauge composite index of financial development, and square up the trend of development; Third, economic growth is one-way causal relationship of comprehensive level of financial development, so China's financial development lags, needing to speed up the reform of financial system; Fourth, the level of financial security is constantly declining, suggesting that China has not enough attention. Financial growth degree has no upward trend, suggesting that the long-term power of China's financial development is not enough, and the competitiveness of financial institutions is relatively weak; Fifth, financial scale, financial ecology, financial structure, financial opening have two-way causal relationships with economic growth,China can continue to improve financial development from these aspects, to promote economic growth; Sixth, economic growth has the one-way causal relationship with financial deepening, suggesting that China's financial deepening shortages, nending to keep on inproving, but should pay some attentions to the flexible control.