Financial Development, Technology Innovation And Economic Growth

The credit market is studied with an informational privacy basically according to an endogenous growth model. Here the financial intermediary is not fully developed which means that they can discern the effort made by any borrower but fail to directly indentify the type. In this case, one who is capable of the project will send their signal and cause the separation of the market. Such self-optimization may cause more rapid growth, if the effort has improved the quality of entrepreneur in next period who with a higher possibility to guarantee a return for the same amount of investment. Such conclusion may provide several implications for government policy and further analysis, since evidences suggesting the complexity of relation between finance and economy development are mounting. The paper finally arrives at the proposition one and two, indicating that an inverse Ucurve can depict the relationship of finance and economy. Based on this study, we delve into some empirical study of the relationship between financial development and growth, hoping come up with some innovative insight. Besides, this paper dissects the case of Wenzhou, through its financial arrangement, economy growth and technology enhancement. With a new interpretation of the transition of financial system and industry, we can believe the model in this paper can explain much of Nongovernmental credit which was once pervasive in Wenzhou.