The Relationship Between The Provision Of Credit And The Development Of Economy

At present, many theses analyze empirically or theoretically the relationship between the provision of credit and the development of economy, however, almost of them are on basis of a whole country. Few of them are on research of the relationship of regional development of economy with the regional provision of credit. Actually, the relationship said above at different region demonstrates adversely. As the open coastal cities, economic development in Shandong Provence has been in the late industrialization; when the mainland in the development of manufacturing, Shandong Provence stated industrial upgrade and developed the high value-added industries. Now, the economic growth in Shandong Provence facing a new situation and need to optimize the credit structure to support certain industries, but credit are not suited the development of related industries, the gap of economic development level and credit support among regional in Shandong also increase.The paper based on the current economic situation in Shandong Provence and studies the relation between credit and economic growth. First, use credit theory analysis relationship between size and structure of credit and corresponding industrial output value, result of that the current credit is irrational in industry, regional and lead their development is unbalanced. Then, Summarizing the results of previous research,this paper studies the transmission mechanism of the motivation of provision of credit on the growth of the economy, and use 1978-2009 time series data of Shandong province to take integration and the Granger cause test, and the test result demonstrates that the relationship between economic growth and provision of credit of Shandong province is stable in long term, and the economic growth is Granger cause of provision of credit, but in the 10% significance level, the economic growth leads to credit expansion. On this basis, this paper use contribution of the provision of credit to economic growth and flexibility index of the near ten years data (2000-2009) to analyze the function of provision of credit on economic growth, and the analysis shows that the average annual value increased of contribution is 1 percent more than the value increased of GDP, the index demonstrates that the function of the provision of credit on economic growth can be enhanced in some extent.Based on study on Shandong Provence credit, there are some problems: deposit credit balance matter result of inefficient use of funds; new industries and new products manufacturing financing difficulties; credit support is imbalance among regions, etc. in order to optimize the credit structure and scale, thereby promoting economic growth, governments need to improve the regulatory system, build a good credit environment; financial institutions need to find customers, and in according with its own functions to strengthen the credit support to weak industrial; the credit demand institutions need to strengthen their own competitiveness, to get higher credit and become quality customer.