Research On Financial Development And Urbanization In China

Born with industrialization and modernization, urbanization is the symbol of human civilization, and it is always the focus of our society. Especially in the"Eleven-Fifth"planning period, which makes quickening urbanization be the staggered target, urbanization has been a new spark of the development of national economy, and has evoked people's enthusiasm to study the meaning and drive of urbanization. In respect that finance is the core of modern economics and urbanization is the drive of the development of modern society, studies on the relationship between financial development and urbanization also should be concerned. It is significant of this theory to make fully use of limited capital resources, to resolve the bottleneck of fund in urbanization, to exert the effect of finance well to make urbanization accelerated, and to meet the need of the development of urbanization better.In view of this, it studies the relationship between financial development and urbanization theoretically and empirically in this paper. In the first part, it makes an analysis and summary of the theories of the relationship between financial development and urbanization and the findings of scholars in country and abroad. Then through looking back to the process of development of finance and urbanization, it analyzes the interaction mechanism between financial development and urbanization, and presents the interaction theory. That is through transferring savings to investment, improving the efficiency of capital collocation and changing the behavior of consumption, financial development mends the pace of urbanization, while through getting people, fund and goods together, urbanization increases the need of fund in city economy, and makes financial departments grow up stably and quickly.In the second part, using economic growth, education and infrastructure construction as control variables, a Vector Autoregressive model with control variables is firstly used in its study to explore the relationship between scale expansion, structure adjustment, efficiency enhancement of financial development and urbanization by Cointegration test and Granger causality test from national angle. Next, using Feasible Generalized Least Squares (FGLS) and Ordinary Least Squares (OLS), it establishes panel data models and cross-section models to explore the relationship between financial development and urbanization from provincial and intercity angles. The empirical conclusion supports its theory intensively. Through empirical research in this paper, it finds that①the relationship between scale expansion, structure adjustment, efficiency enhancement of financial development and urbanization is positive;②financial development is the cause of urbanization after reform and opening in China;③it is very obviously that the pace of urbanization is speeded by financial development even from the angles of different provinces or different cities;④there is regional difference in the promotion of financial development to urbanization.