| In china,capital investment has become the most significant drive of economic growth for years.Given the constant growth on investment total amount along with the rate of investment,we are now putting more attention to the efficiency of capital allocation in China.Problems like how to measure the efficiency of capital allocation,whether there is any difference in the between-year and between-industry efficiency and what factors influence the efficiency will be answered in this paper.Jeffrey Wurgler(2000) raised a new method to measure the efficiency of capital allocation:He used the efficiency coefficient between investment and value added as an index of efficiency.The underline assumption is that the finance market would affiliate capital to flow into high profit industries or out of low profit industries;or both ways.This paper utilizes Jeffrey Wurgler's method to calculate China's efficiency of capital allocation,both between-year and between-industry.With the results,we are able to analyze the relationship between the efficiency and China's financial market and other possible factors.In conclusion,I found that China's financial market has little to do with the fluctuation of efficiency;however the efficiency is negative correlated with the extent of state ownership and enterprise size among various industries.In addition,I found the group of larger-size-enterprise industries showed significant relationship with all financial indexes. Following the results,I raised a few suggestions for policy decision in China. |
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