The Research Of Relationship Between Economic Growth And Financial Development In China

With the rapid economic development in china, the research on the relation between financial development and economic growth becomes one of the most important fields.In this paper the research reviews firstly the theory about financial development and economic growth, in which the equilibrium and mutual effect between financial development and economic growth are analyzed in three aspects: the function of financial intermedium, the structure of financial system, the research of economic growth. Then we expand the research about financial development and economic growth, on one side in part of mechanism research we begin from the balanced development of financial development and economic growth, explain the inner relation between them by the model of endogenesis growth in the economic theory and at last set up the econometrics model about the balanced development of them. On the other side in part of demonstration research we introduce the applies of co-integration theory in economic and financial researches firstly, then we finish the co-integration test between the economic growth and the investment, the credit, the stock, at last build the vector error correction model between them. The result of demonstration indicates there is co-integration relationship between economic and financial variables in china, and quite different from the developed countries it is unique to the channel of financial development to economic growth. Firstly china's economic growth is mainly achieved through credit expansion. Secondly, china's capital market does not play an important role as expected, but rather there is little relevance between the development of stock market and economic growth.At last the paper suggests the policy should put more points in adjusting and optimizing the financial structures and building the balanced development of economy and finance.