A Study Of The Relationship Of Wuxi Financial Development And Economic Growth Since Reform And Opening-up

The relationship between financial development and economic growth is a key subject of financial development theory, and there are also lots of researches related these years. For overseas studies, they mostly focus on the causality of financial development and economic growth with data collected from different countries. And for the empirical studies in China, they are mostly carried out based on national data and less in view of regional characteristics. Since the research into development process of regional economy and finance as well as reality analysis is not sufficient, the further expansion on theory seems somewhat limited. As an energetic region in the developed southeast China, Wuxi reflects not only the common progress of China's financial development, but also some unique characteristics of itself. And so it could be much worthwhile and indicative to choose Wuxi as research objective. This paper studies the correlation and causality between financial development and economic growth based on the review of Wuxi's financial development and some obvious characteristics. Furthermore, it spends lots of efforts to testify the feasibility of some popular financial development theories such as financial structure, financial deepening and financial function. The paper also put forward some policy suggestions corresponding to above researches. It consists of seven parts.Part one introduces the inevitable correlation of Wuxi's financial development and economic growth, the research path and general framework. A brief summarization of existing studies can also be found in this part.The part of the relationship between financial development and economic growth consists of three sections: theories review, expatiation of the concept to be researched and functional schemes of financial development on economic growth. The theories review emphasizes on the introduction of theories such as financial structure, financial deepening and financial function as well as a concise differentiation of them. For the expatiation of researched objective, the paper gives more attention to Mr. Patrick's two financial development paths of"supply-oriented"and"demand-oriented". The section of functional schemes introduces the financial system's basic functions of five categories, and the conduction scheme of financial development's impact on economic growth.The literature review part is composed of overseas studies and domestic studies. For the latter ones, a brief categorization and summarization to the existing researches of both national and regional levels.Next, the paper generally categorizes Wuxi's financial development and economic growth processes, and then proceeds to analyze them, respectively in view of the volume, structure, fixed assets input, fund usage efficiency of Wuxi economy and volume, structure, indirect financing efficiency, local financial institutions development of Wuxi finance. The empirical research part starts with an introduction of research methods and indexes included. Dickey-Fuller test statistic, co-integration test and Granger causality test are applied to study the duration data of 1978-2005, 1978-1991 and 1992-2005. It indicates that generally speaking, Wuxi's financial development is compliant with the theoretical"supply-oriented"type. However, the sub-duration of 1978-1991 seems to be"demand-oriented"and 1992-2005 remains"supply-oriented". In the closing part of policy suggestions, the paper insists on the finance-leading strategy of balanced emphasis on both volume and efficiency. It argues to develop local financial institutions, strengthen internal administration of financial agencies and improve their operational efficiency, so as to found the finance market with China characteristics and healthy regional financial environment as well as supportive financial system for small- and medium-sized private enterprises.