Empirical Study On Finace Development And Economy Growth Of Wuxi

Regarding of the relationship of financial development and economic growth, the general view was that the two reciprocal causation. Gupta (1984) and Jung (1986) did Granger causality test and demonstration test on developed and developing countries, and the results showed that the two reciprocal causation.Reference of the results of foreign research, many scholars of China's did empirical analysis on the relationship between financial development and economic growth. But the relationship between the two did not have a agreement so far, conclusions of the main difference lies in the different choice of target. In addition, taking into account the significantly imbalance of China's financial development, Chinese scholars have done the exploratory study on the relation between financial development and economic growth in the specific areas. The conclusions of the study had some inspiration to this article.For the direction and application of the study's conclusion, the paper used the data of financial development and economic growth in Wuxi city in 1993-2005 to do empirical test on the relationship between the two. The results of cointegration test showed that there was a significant correlation between FIR, FMR and DGDP in the long-term. This showed that there was a close relationship between the financial development and economic growth in Wuxi city, and their ties included the expansion of the scale of financial development and changed efficiency. The results of Granger causality test showed that there was a two-way causal relationship between FIR, FMR and DGDP, which showed that the expansion of the scale of financial development and the improvement and enhancement of the financial efficiency could promote the economic growth, in turn, the economic growth would promote the local financial development in Wuxi city.Based on the conclusion of empirical study, the paper raised three policy proposals: 1. Developing diversified financial system, and building the foundation of economic operation; 2. Improving the quality of financial assets growth, and restraining the over virtualization of economy; 3. Promoting economic growth comprehensively, and developing the finance industry.