The Correlation Between Financial Innovation And Transformation Of Economic Growth Models

Recently, Chinese economy faces a double task: structure reform and transform- ation of economic growth models. The former extensive economic growth model can no longer fit the development of modern economy. It becomes a historic task to move toward intensive economic growth model, which will bring a deep influence on Chinese economy. As we know, finance takes an important role in economy, in future, it will become the heart of economy. This thesis attempts to study the relationship between finance development and economic growth at first, and then detailedly analyses the relationship between finance innovation and economic growth model .I hope it will provide some benefits for Chinese economic development.Five chapters are included in this thesis. The first chapter is an introduction, which analyses the background, target and research value of the thesis, presenting a general study of current domestic and foreign achievements, and introducing the structure of the thesis in brief. The second one elaborates the basic theories on financial innovation and economic growth. The third chapter explores the interactive mechanism between finance and economic growth,economic growth models By analyzing five essential function of financial system, I find financial innovation may push forward capital accumulation, productivity improvement and technical development to act on economic growth model, and economic growth model can affect financial innovation by four theoretical models, namely, threshold effect, capital accumulation and bankrupt's cost, government control . in fourth chapter, I make an brief analyses according to the data of 1985-2004, and draw the conclusion that in China, the economic growth model is still extensive, though very little. Then, by using such measurement as correlation test, Granger causality test, cointegration test and nonested test, this thesis analyses the data of finance and economy in China, so it shows that financial growth in China is demand-following, finance acts on economy through quantitative expansion, the deepen process of finance lack coordination, and also finds out the way by which finance innovation affect the transformation of economic growth models. Based on the previous research, the last chapter gives some suggestion.