Study On Relationship Between Financial Development And Economic Growth Of Yangzi River Delta District

People pay a lot of attention to the relationship between financial development and economic growth, most of them believed there exist a mutual influence between them. We can divide the financial development into direct financing development and indirect financing development, and find the relationship between them and economic growth. In the latest20years, finance became more and more important in modern society. In2010, the bank credit proportion of GDP and capital markets proportion of GDP rose to169.4%and90.4%. As the most developed regions in China, Yangtze River Delta and its financial development has an important impact on economic growth and industry transformation. So people concerned the Yangtze River Delta region’s relationship between financial development and economic growth.The first chapter is an introduction, talked about the research background and the whole idea of the paper. The second chapter is relevant theory and literature review, set up a foundation for the further study. The third chapter gave a comparative analysis description of the financial development and economic growth in Yangtze River Delta region in1994to2011, the data show the development degree of the whole financial development as well as indirect financing system, direct financing system are higher than the national average. Shanghai has the most developed financial system, followed by Zhejiang and Jiangsu. The forth chapter tell about the mechanisms of how financial system influence economic growth. The fifth chapter is empirical analysis and causality test, the results showed that the financial system as well as the development of capital market of Yangtze River Delta region significantly promote local economic growth, Indirect financing played an important role on economic of the largest is Zhejiang, followed by Jiangsu, and Shanghai; direct financing system played an important role on economic of the largest is Shanghai, followed by Jiangsu, and Zhejiang. In addition, the causality test shows that there exist a certain causal relationship between financial development and economic growth. Though financial development promotes economic growth to a certain extent, financial development and the changes in the financial structure are meet the need of economic growth. The sixth chapter is a conclusion.