Microscopic Analysis Of The Impact Of Economic Growth In The Financial Development In Our Country

The Economy in our country develops fast since we carried out the Open and Reform Policy. Meanwhile, the department of finance serves for the enterprises and the majority public. As a result, more and more scholars began to focus on the research of the relationship between financial development and economy growth. According to the understanding of formal researches on this field, it can be easily found that most of scholars in and out of China prefer to start from the macroscopic and medium beddings. However, less of them have noticed the enterprises, as one part of our economy, may act as the bridge between the two macro economic variables. Based on the analysis on the view of enterprises financing, we can understand that financial system and the operation of firms has inner interaction. Moreover, it can be easy to transfer to the research on economy growth and business operation. Firstly, we begin with the review of theories and researches related to financial development and economy growth. At the same time, the framework of this paper has been set up, which follows the view that financial development promotes economy growth. Then, the analysis goes on through the way of three different angles, in order to explain how financial development affects performances of enterprises. Besides, it is also required to check the relations between economy growth and business performance. In the third part of this paper, three indexes from King and Levine are set to describe the level of financial development. Meanwhile, financial indexes selected from manufacturing industry have been founded. In the base of preparing dependent and independent variables, we use the method of co-integration and Error Correction Model to reflect the long-term relations between them, as well as the short-term. Finally, the whole analysis is finished by the regression between the growth rate of GDP and variables related to business operation. Seen from the result, we can conclude that the scale and effectiveness of financial development have positive effect on ROA, ROE and ROC, while the BANK reflects the opposite relations. Considering the detailed reason of this regression result, it can be concluded that the reform of present financial system is not perfect. Our country should foster the financial system thoroughly and make it diversified to serve all kinds of enterprises, especially for the fund demand of Small and Middle Enterprises. Moreover, we insist that the reform of our financial system should adapt to the adjustment of industrial policies. With the help of modification of our financial environment, we can lead the capital in the field of investment to the direction of improving the performance of enterprises. It doesn’t only reflect in the increase of the total number, but also in the entire quality. Only in this way, we can expect a health and sustainable development of economy.