Banking Structure,Density Of Banking Service And Economic Growth

The impact of financial development on economic growth has always been a controversial issue; numerous economists put forward their own ideas and analysis on the relationship between the two parts. Some economists argue that financial development has no significant effect or no effect on economic growth, there is no correlation between the two parts.For example, the Western classical economists believe that changes in money supply do not affect output, employment, real economic variables and so on. Friedman thinks that "money is essential" is only for the short term,in the long run changes in the money supply would lead to changes in price levels, but does not affect real output changes.According to the theoretical analysis of rational expectations Lucas thinks changes in money supply even in the short run nor will it has any impact on output or employment.But many more scholars believe that the financial development by leveraging financial intermediation, resource allocation, credit creation, payment and settlement, information production, the implementation agency supervision and risk management functions plays an important role for economic development. For example, Goldsmith, and John Hicks in their study found that financial development are related to economic growth. Given that the current Chinese economy is still the world's lower-middle level of development, capital allocation remains a constraint for one of the most important factors of economic development, financing in the process of regional economic development play an indispensable role. From the perspective of the financial structure of the industry examining the specific relationship between the financial structure and economic growth is also currently an important research field. Considering that China's capital market has always been less developed, the role of bank intermediation is even more prominent. So researching the relationship of Banking structure and economic growth is meaningful, according to the reference to the network of banking services and economic growth of the related literature, written by Yi Gang (2001),in the paper he thinks since the reform and opening up there have been two major big competition in China's banking sector, the first of which occurred in 1984 and 1997 with institutional expansion as the main means of competition, the expansion in the number of banking institutions and employee stimulate the competition among banks, thus affect regional economic growth.In this paper the density of banking service means the density of population or radiation radius, including not only the density of bank service network, and the including banking intensity. Based on the above two angles formed this paper:Banking Structure, Density of Banking Service and Economic Growth.This paper focuses on the relationship of Banking structure, Density of Banking service and Economic growth. Considering differences in regional development in China, this paper gives a detailed analysis.In this paper, the literature review on the relationship of financial development and Economic growth, banking structure and Economic growth should be straightened out and commented. I absorbed the realities and conditions as the theoretical basis of this study; at the same time, I made a theoretical analysis of the role of the Banking structure and Density of Banking service in the promotion of Economic growth., and I made a theoretical AK model analysis, banking services, density and regional economic growth was logical analysis, and two hypothesis.In theory, I made hypothesis and analysis, and the empirical analysis using sub-provincial panel data from China's Banking Structure, Density of Banking Service and Economic Growth. The results show that the increase of market share of small and medium financial institutions in the competitive banking structure is conducive to regional economic growth, for per square kilometer of the big four state-owned commercial banks in Density of Banking Service, the number of excessive branches gives a negative impact on the regional economy, while the increase of the loan of employee in the average amount of state-owned banks can contribute to regional economic growth. All of these conclusions, verify the theoretical analysis written before.Finally, for the actual development of different regions, this paper recommended some policy proposal for the optimization of regional Banking Structure. On the one hand, the joint-stock reform of four major state-owned commercial banks is necessary, the introduction of strategic institutional investors, or absorption of private capital, cutting off the government and the state-owned four large commercial bank linkages are useful, and they gradually developed into a great enterprise whose property right is clearly established. On the other hand, we can encourage and guide the establishment of small and medium private banks and their development. Proposed density of the regional banking services I also give some policy recommendations:First, the withdrawal of the four major state-owned commercial banks in rural areas, or township market (some rural ones which large-scale or state-owned industrial enterprises are concentrated are not included) is advisable, because we can get more credit resources to focus on conditional large enterprises or large projects, so we can leave the small and medium financial institutions such as rural commercial banks or rural credit cooperatives and so on holding on this market. Second, to continuously upgrade the quality of workers in the big four state-owned commercial banks, and to establish an effective year-end assessment for this workers and a good incentive and restraint mechanisms will be a great progress to improve operational efficiency.