The Research On The Regional Credit Formation And The Allocation Of Capital In China

Since the reform and opening, China’s economy has grow quickly. But economicgrowth in the high input and low efficiency problem should not be overlooked, how tomaintain rapid economic growth, the further transformation of economic growth mode,improve resource allocation and efficiency, has become more and more important.Paper based on Jeffrey Wurgler (2000) model, using industrial value added andnet fixed assets form29provinces, municipalities and autonomous regions of Chinabetween1999and2009, and using the panel data to establish empirical models. TheGeneralized small squares analysis shows that China’s national level of capitalallocation efficiency, is0.507, lower than most developed countries. Inoder toanalysis the dynamics of the1999-2009changes in China’s capital allocationefficiency, using time varying coefficient model.The study found that the efficiency ofcapital allocation in China is relatively large volatility of capital allocation efficiencyand national macro-economic control of the investment. Further using the individualvariable coefficient model of China’s provinces, municipalities and autonomousregions, the study found the level of efficiency of capital allocation in each provinceas a whole is not high, and significant regional disparities, the efficiency of capitalallocation in some provinces, significantly lower. In order to study factors affectingthe efficiency of capital allocation, the initial papers selected: areas of economicdevelopment level, market level, foreign direct investment and governmentexpenditure, then introduce the bank credit factors.The paper emphasises on thefactors of the banking credit affects capital allocation efficiency, the total size ofselected areas of the credit and non-state sector access to credit funds as a measure oftwo indicators of regional credit indicators.Then using of "residual first-orderautocorrelation structure " panel data method to estimate of the geographicdistribution of credit to non-state sector indirectly. Empirical results show that theefficiency of capital allocation for credit factors that influence is positive, the optimaladjustment of credit can improve the region’s capital allocation efficiency, but relativeto other parts of provinces, the eastern provinces, while access to the most creditfunds, but the credit factors to improve the efficiency of capital allocation withminimal impact. Finally, according to results of empirical research, the paperproposes the improvement of regional differences in credit and optimizes the efficiency of the regional capital allocation policy recommendations.