Study On The Relationship Between Financial Development And Regional Economic Growth In Gansu Province

The close relationship between financial development and economic growth has gained widespread acknowledgement among scholars and government departments. A sound financial system can promote economic growth by its positive influence on interest rate, accelerating the rate of conversing deposit into invest, and optimizing the efficiency of resource allocation. The west region of China is a backward part of the country in terms of economic development, and is faced with financial repression. Since financial support is indispensable to the development of modern economy, it is vital for us to be fully aware of the importance and urgency of promoting financial development in Gansu ---a province in the west region of China. This thesis takes Gansu as the research subject and makes detailed analysis of its economic aggregate, income of residents, industry structure, and financial development. It attempts to explore the relationship between financial development and economic growth in Gansu so as to provide reliable references for financial development policy making in Gansu.The present study is based on the theory of economic growth, financial development theory and the theory of regional economics, and adopts an empirical research method. Quantitative data regarding the regional economics and financial indicators are collected, and Granger causality test and regression analysis are applied to the data. The conclusion is reached that the degree of financialization does have a mutually promotive relationship with the economic development in Gansu. Suggestions are also made concerning the financial measures that can be taken to promote the economy development in Gansu.