The Empirical Analysis Of The Relationship Between Financial Development And Productive Efficiency In China

As the prerequisite condition of the social development and political stability, economic growth has always been paid attention to in order to explore the origins, which including accumulation of productive factors, improvement of productive technology, productivity and resource allocation, optimization of economic structure and perfection of economic and legal system, and then take measures to release productivity. Since 1970s, the economists have begun focusing on economic growth from the point of financial development. So far, they have come to the conclusion that the positive nexus exists between financial development and economic growth, that is, the higher the level of financial development is, the faster the speed of economic growth is.Improvement of productivity is the sustainable, stable driving force of the economy; so many literatures focus on the variation and the decomposition of productivity efficiency index, but less are concerned about the operating mechanism and synthesized degree of the interaction between financial development and productivity. The answer to the above questions can help us to further the analysis of the relationship between financial development and economic growth.To achieve these goals, after constructing the experience model supported by the economic growth model, this paper carries out an empirical analysis of the relation between financial development and productivity on the basis of analysis of productivity changes and retrospection of china's financial development history. This article first calculates the Malmquist productivity index and its two components (technical efficiency and technology advancement) with DEA method (Data Envelopment Analysis); Secondly, employing principal analysis to extract the data to comprehensive indices with no significant positive correlation between each other; Thirdly, after controlling the effect of other variables, it analyzes the impact of financial development on productivity and ingredients, and then explores the mechanism through estimating the models including financial development and productivity index or the decompositions. At the first stage, this thesis estimates the models with the methods, such as ADF unit-root test and cointegration test; at the second stage, estimates the models with the methods of GDM (Generalized Difference Method), which could correct the Autocorrelation that exists in the residual sequence.After empirical analysis, it leads to the conclusions as follows: at the first stage (1978-1991), the development of financial intermediations enhances China's productivity mainly via raising technical efficiency, especially pure technical efficiency; at the second stage (after 1991), expanding the scale of financial intermediations and stock market doesn't bring about improvement of productivity, but financial development efficiency has positive effect on the productivity by means of its contribution to technical progress and economy of scale.