| The issue concerning with the relationship between financial development and economic growth has been discussed for a long time. With the credit crisis in the United States triggering the increase of world-wide financial risks and the global economic downturn, now the issue concerning with the relationship between financial development and economic growth once again arouses people's attention. China joined the World Trade Organization (WTO) on December 11, 2001. In accordance with the commitments to the World Trade Organization, China's financial sector will be liberalized gradually and completely. Financial liberalization brings not only opportunities for the development of financial sector in China, but also the new challenges for the development of financial sector in China. However, most of the empirical studies concerning with the relationship between financial development and economic growth in China did not take indicator of financial openness into consideration. Therefore, based on the previous studies, this thesis tries to add the indicators of financial openness and conduct the empirical testing of the relationship between financial development and economic growth before and after China's entry of WTO. The focus of study will be laid on the changing characteristics of the relationship between financial development and economic growth prior and post china's WTO accession.This thesis consists of six chapters. Preface is devoted to introducing the background of choosing this topic and significance of the present research;Chapter One is devoted to literature review of the studies on the relationship between financial development and economic growth both at home and abroad;Chapter Two is mainly devoted to the theoretical analysis of financial development and economic growth as well as the introduction of the theoretical model; section 2.1 mainly introduces the theory of the relationship between financial development and economic growth. That is Gregory and Shaw's broad monetary and financial theory, Goldsmith's financial structure theory as well as McKinnon's financial deepening theory and economic endogenous growth theory. Section 2.2 introduces the theoretical model of the relationship between financial development and economic growth. In this thesis, the author uses Li Zhao et al's approach(2006), establishes the two-sector model including the financial sectors and real sectors in order to study the influence of financial development towards economic growth Prior and Post China's WTO Accession.Chapter Three is devoted to introducing the empirical models and research methods; that is the unit root test, cointegration test, vector error correction (VEC) model and Granger causality test.Chapter Four is devoted to the empirical test of the relationship between financial development and economic growth prior and post china's WTO accession. In this chapter, the author use cointegration test, vector error correction (VEC) model and Granger causality to test the relations of China's financial development and economic growth empirical test prior and post china's WTO accession First of all, through the ADF unit root test to test the stability of this article of selected data, and then proceed to Johansen cointegration test and Granger causality test, and finally build a VEC model. Section 4.1 introduces the selection of variables and data indicators; In section 4.2, test the relations of China's financial development and economic growth empirical test before accession to the WTO. In section 4.3, test the relations of China's financial development and economic growth empirical test after accession to the WTO.Johansen cointegration test show that financial openness on economic growth is positive prior and post china's WTO accession, but this influence is relatively weak. Financial openness increased by one percentage point each, GDP to increase 1.07 percentage points. After China's accession to the WTO financial openness on economic growth remain positive, but this influence than the former accession to the WTO has been greatly improved, and financial openness increased by one percentage point each, GDP to increase 1.51 percentage points. This shows that after China's accession to the WTO along with the improvement of financial openness and financial role in the economy enhanced markedly. And China's accession to the WTO before the financial depth and economic growth, a negative correlation exists between the relationships, DEPTH each increased by one percentage point, GDP lowered 0.63 percentage points. After China's accession to the WTO financial depth and economic growth is still a negative correlation between, but after the accession to the WTO to measure the depth of the financial impact on the economy than the former accession to the WTO has greatly improved, DEPTH each increased by one percentage point, GDP percentage points lower 10.04. It follows that China's financial development and economic growth between the long-term and stable relationship, whether it's accession to the WTO's accession to the WTO before or after the measurement of financial development indicators -- financial openness and economic growth both have a positive correlation between stability; financial depth and economic growth have a negative correlation.Granger causality test show that China's accession to the WTO before the measure of financial depth and economic growth there is a one-way causal relationship. That is, the financial depth of the Granger causes economic growth, and economic growth of the causal relationship between financial depth is not obvious. After China's accession to the WTO in order to measure the financial depth and economic growth is still the existence of such a one-way causal relationship. China's accession to the WTO before the financial liberalization and economic growth there is a one-way causal relationship. That is, economic growth Granger causes financial openness, and financial liberalization on economic growth of the causal relationship is not obvious. After China's accession to the WTO and financial liberalization and economic growth between a two-way causal relationship. That is, economic growth Granger causes financial openness, and financial liberalization is also Granger causes economic growth. This is because China's accession to the WTO before the lower the degree of openness of financial, financial openness on economic growth of the causal relationship is unclear. And China's accession to the WTO, the financial will be open to, the impact on economic growth has began to highlight.Part V, before and after inspection of China's accession to the WTO's financial development and economic growth changes the relationship between characteristics. Section 5.1 mainly before and after the financial development of China's accession to the WTO and the relationship between economic growth comparison. Section 5.2 based on the evidence put forward policy recommendations.Part VI, the conclusion. Although the correlation between the financial development and economic growth has not changed prior and post china's WTO accession. Financial depth and economic growth are negatively related; financial openness and economic growth are is a positive correlation, but we should see in the post-WTO China's financial development indicators measure the impact on economic growth than the former accession to the WTO enhanced markedly. This shows that after China's accession to the WTO should be more careful to use monetary policy to regulate the economy. Granger causality test results show that after China's accession to the WTO's financial development and economic growth is the relationship between cause and effect. Financial development can promote economic growth, rapid economic development can also promote the continuous development of sound financial. |
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