The Empirical Analysis Of Financial Intermediary Development And Economic Growth Relationship

The experiences of economic growth of many countries around the world show the interrelations between financial intermediaries' development and economic growth. As far as my country is concerned, do these interrelations exit? If they exit, what are these interrelations? How do financial intermediaries improve economic growth? And what are the channels and mechanisms? How we calculate the contribution of the financial intermediaries to economic growth in our country. This paper aimed at get these answers.This paper mainly composes of three parts. Firstly I analyze the causal relationship between the financial intermediaries and economic growth in the way of Granger casualty testing. The result shows the mutual casualty relationship exists, and economic growth more stimulates financial intermediaries' development. I think the main two reasons lead to this situation. One is that the reform of financial system is compelling. The other is the frequent adjustment of the industries' structure.Secondly I analyze and reveal the transmission channel between financial intermediaries' development and economic growth theoretically and positively. The result shows that there is a cointegrated relationship between PRI and RCAP, and their VEC model also show there is a mutual causal relationship between them. But, there isn't a cointegrated relationship between DEPTH and RCAP.I think the reasons are the following: The supply of deposit isn't related tight to the demand of investment, so deposit can't transfer into the investment efficiently. In addition, there isn't the cointegrated relationship between the efficiency of the resource distribution and the two variables presenting the financial intermediaries' development. I think there are two reasons: (1) the state's commercial banks are the dominant part of our nation' financial system, but their operating efficiency is low. (2)the small and middle financial organizations develop very slowly; (3) there is still a soft restraint in system of credit. The owner' discrimination exits in loading to the non-state'scompanies.At last I calculate how much financial intermediaries contribute to economic growth by C-D function including the variables presenting financial intermediaries' development. The result shows: These two variables both improve economic growth. The average value is about 0.2. PRI' coefficient value is greater than DEPTH' coefficient. The reason is probably that deposit can not efficiently transfer into the investment. By the above-mentioned conclusion this paper gives some policy advices.The analysis structure of this paper is an innovation. It uses Granger casualty testing and cointegrated theory, so its economitrics way is newer. In addition, its conclusion is that there is a mutual causal relationship between the financial intermediaries and economic growth, which is different from the former conclusion.