Financial Development, Capital Formation And Differential Regional Effects

With the development of modern economy, the finance in the modern economy is becoming increasingly important. Financial development has become an important factor in economic growth, showing a strong driving force and permeability. it also has become a focus of academic circles on financial development and economic growth theory. Although there is still some controversy, but most economists indicate that financial development has great role in promoting economic growth, through theoretical research and empirical analysis, and ultimately the role attributed to capital accumulation and technological innovation are two ways to affect a country or region's economic growth. Combined with China's economic development process, compared with the technological innovation, capital accumulation played a more important role in China's rapid economic growth. The development of financial system which is matching with China's economic growth model has played a decisive role in the capital formation growth. In some ways the success of capital accumulation can be said that the "Chinese economic miracle", then how is it to affect the capital accumulation? How is it contributing to economic growth? Financial development in China's eastern, central and western regions is the process of capital formation has a catalytic role, promoting the role of difference whether the differences and how much? Based on these issues to explore and study, for the analysis of financial development and capital formation and economic growth in the relationship and interaction between the path of financial development to reveal the dynamic effects on capital formation and regional differences have important theoretical and practical significance.Financial development is to promote capital formation and an important factor in overall economic development. this article from the theoretical level, to further clarify the historical context of financial development and capital formation process mechanism, through financial intermediaries and financial markets, analysis of financial development for the role of capital formation. By building a dynamic panel data model to study the financial development of the dynamic effects on capital formation and regional differences, the results show that:overall, the scale of current financial development and both lag a significant effect on capital formation; financial deposits and loans than the current values can lead to significant increase in the rate of capital formation, and lag a financial deposit and loan capital formation than to bring a more significant negative effect; current private sector loans for capital formation have a negative impact, and its lag one showed a more active role. In the sub-regional study, found that financial development between different regions and the dynamic effects of capital formation showed some differences.According to the background and significance of topics, arranged in a logical structure on the paper is divided into five chapters, as follows:Chapter one, Introduction. The topics discussed in this article background, significance and research methods, and gives the specific structure of this arrangement.Chapter two, literature review. In the comprehensive collection, sort and abroad on the basis of the relevant research literature, analysis, comparison pointed out those domestic inadequacies of existing research and ideas of this research leads.Chapter three, the theoretical basis. By the theory of financial development and capital formation mechanism of the elaboration of the theory, analysis of financial development on capital formation mechanism of the pathway, as this paper, the theoretical basis and foundation.Chapter four, empirical model. Analysis of the previous two chapters, based on dynamic panel data model to build on the financial relationship between development and capital formation for dynamic analysis, testing and inspection of financial development in China's eastern, central and western regions in the process of capital formation effects of differences in the region.Chapter five, Conclusion. Summary of the full text of this article gives the main conclusions and policy recommendations. And pointed out that lack of this study and future research prospects. There are two main innovations of this paper:first, from the content point of view, breaking the existing literature are mostly limited to the national level research framework, further by comparative analysis of financial development on the regional level, the relationship between capital formation and a study. Second, from a methodological point of view, the traditional methods can not reflect the financial development of the dynamic effects on capital formation; can not reflect this dynamic effect in the differences between various regions of China. In view of this paper, the SYS-GMM dynamic panel estimation methods to build models to study the formation of financial development for the dynamic effects of China's capital and regional differences.