An Empirical Study On The Relations Of County Financial Development And County Economic Growth

The financial development and economic growth of Jiangsu Province have made tremendous achievements. The researches on the relationship between financial development and economic growth have go deep into regional economy, so this paper will go deeper into county’s economy, so as to figure out the relationships between the county’s financial development and the county’s economy.Drawing on previous studies, we conclude that the regional financial system, on one hand, promotes regional economic growth by increasing private savings, improving marginal productivity of capital and accelerating the conversion rate of savings into investment; on the other hand, accelerates regional economic growth by promoting the upgrade of industrial structure.Firstly, this paper describes related literature review. It defines related concept definition, summarizes the mechanism of the financial development and economic growth and summarizes the domestic and foreign relevant literature about financial market structure and financial market efficiency to supply groundwork for the study.Secondly, this paper describes the situation in county economic growth and the development of county finance in Jiangsu province. It analyses the sample counties in Jiangsu province of the county economic growth situation mainly from four aspects:the economic development speed, the change of the structure of industry, economic opening degree and the investment situation. And then, it analyses the distribution of the county financial institutions in sample counties of Jiangsu province, from three aspects:the loan growth speed, the coverage of financial services and the degree of financial deepening to analyze the present situation of the development of county finance in the sample counties in the middle, southern and northern Jiangsu.Thirdly, this paper does an empirical research of county financial development and economic growth. It selects index variables of financial development and economic growth. And then, by establishing a panel data model of Jiangsu province’s county financial development and economic growth index, it does Multiple Linear Regression Analysis and related inspection to verify the influence from county financial development to county economy growth. Through the control of other variables, it does each step empirical research on the indicators of the development of financial to test the differences of the influence to county economy in the samples in southern Jiangsu, the middle Jiangsu and the northern Jiangsu. On this basis, the paper analyses the cause of the empirical results.The research shows that county financial market scale plays significant role in promoting economic growth.The higher the county financial market concentration is, the more disadvantageous to the development of county economy there will be. The reason of this is that county economy is restrained by capital requirements of the small loans scale, which on the other hand, it respects that the new model of rural financial organizations and the rural financial institution have larger development space. By the characteristics of the subject of capital to chase interest rate, financial market scale has a positive effect to the development of the economic growth in the southern Jiangsu, and there are not the promoting effect in the middle and the northern Jiangsu.What’s more, the financial market concentration has restricting effects on the development of county economy in the three regions. The higher the concentration is, the poorer the market competitive is, which goes against the development of the economy.Finally, this paper comes to conclusions and policy recommendations. Based on the analysis of the present situation and the description of the empirical results, it summarizes the conclusion of the full text. From the view of the county finance, it puts forward policy recommendations to promote county economic growth in southern Jiangsu, the middle and northern Jiangsu and ease the imbalance of regional economic development, so as to better promote the development of county economy in Jiangsu province and the regional balance of economic development.