An Analysis Of The Effect Of Stock Market On The Economic Growth Of Shaanxi Province

The stock market of China has been developing fast with Chinese characteristics since it was founded. The special developing condition has attracted wide attention of scholars. They hold different opinions on the effect of the stock market on economic growth. Some agree that the development of the stock market has stimulated economic growth by accelerating the capital accumulation and spurring the reform of state-owned enterprises and the progress of economic restructuring, while others argue that there're many drawbacks in the stock market of China, so the stock market has little even negative effect on economic growth. The researches aimed at countries in the past. The article on the study of the relationship of stock market development and economic growth about different areas increases step by step by recently, however, the articles assuming demonstration analysis on the relationship of stock market development and economic growth in western area is limited. Shaanxi, a large province in western area, is situated in the combination part of central and western area of China. The sustainable economic growth in Shaanxi will provide the basis to its soaring as well as the guarantee of the economic development in other western areas. Therefore, there are issues about whether the stock market affects the economic growth of Shaanxi province, what's the size of this effect and how to improve and perfect the stock market of Shaanxi province, which deserve in-depth research of the academe of economy and finance of Shaanxi province. So this paper chooses Shaanxi as the object. On the one hand, it will give the fresh blood to the present study; on the other hand, it will have significance on both policy and practice to make the strategy to foster the area economic growth from the financial aspect.The paper adopts the methods that combine the theory and the practice, the qualitative analysis and the quantitative analysis, the empirical analysis and normative analysis. After concluding and reviewing the documents on the study of the relationship of stock market development and economic growth, the thesis analyzes the function mechanism of the stock market development to economic growth theoretically, and gives emphasis on the function, the path and the stimulus mechanism of the stock market to the economic growth. On this basis, the paper analyzes the present condition of the stock market in Shaanxi province and finds that there are many defects in the stock market in Shaanxi province, ranging from the function of raising money, the transformation of enterprises to the adjustment of economic structure and resources distribution. So the thesis assumes that there is no significant effect of the Shaanxi stock market to economic growth. The empirical result proves that the stock market has no direct effect to the economic growth, and the path can't moves well either. The thesis gives the reasons for such result, and brings up proposition to develop the stock market.On the basis of the former study, this paper chooses Shaanxi province as the object. By bringing in the factor of Non-tradable Shares to evaluate the development of stock market and devising the controlled variables from many aspects, the paper aims to analyze the effect of the stock market on economic growth in Shaanxi and put forward some suggestions for Shaanxi on how to make use the stock market to promote economy. This is also meaningful to some other province in western areas.