The Empirical Research Of Financial Development And Economic Growth In Tongchuan City

International and domestic academics agree that economic growth mainly throughimproving the utilization of elements and increasing elements inputs.As the basic and core ofmodern economy, finance is an important part of the socialist market economic system, whichbecomes the strategic factor to economic progress. There are many researches on therelationship between financial development and economic growth, which mainly focus onmacro or middle level，rarely focus on micro-level. Because of the difference in economicfoundations, natural conditions, policy support, technology and society bases etc, the researchon macro or middle level can’t reflect their relationship comprehensively and accurately. Sothe paper analyzes empirically this question from micro-level, taking Tongchuan city asresearch object, which is a typical economic transformation experimental unit ofresource-exhausted city and top7of national comprehensive competitiveness city.Based on the previous studies, related theory of financial development and economicgrowth, in this paper, we structure financial development and economic growth index systemof Tongchuan city to analyze their relationship statically and dynamically by Eviews6.0,using the data of Tongchuan city between1990and2012as sample and Cobb-Douglasproduction function which added financial factors as model. First, test the stationary of databy unit root test. Second, test long and short-term relationship by cointegration tests andvector error correction model. Third, analyze the causal relationship by Granger causality test.After static analysis, this paper analyses dynamically the impact of one variable’s shock toothers and the contribution of every variable’s shock by impulse response function andvariance decomposition.This study finds that in Tongchuan city, financial development has relevant relationshipwith economic growth just in long term. Financial scale expansion will enlarge economicgrowth, but the betterment of financial efficiency will restrain economic growth. This adverseeffect is the result of high increase of savings and low growth of credit. From an overallperspective, there is a significant two way Granger causality between financial developmentand economic growth in Tongchuan city. At this stage, the effect of financial development toeconomic growth is mainly by financial efficiency, while the effect of financial scale toeconomic growth is significant when their economic development has reached a certain level. The economic growth will always influence financial scale, but this effect to financialefficiency only at this stage. Workforces and investment level will enlarge economic growthin long term. From the result of dynamic analysis, the impact of financial scale has a positiveinfluence on economic growth finally, while, the impact of financial efficiency has a negativeinfluence on economic growth finally, and their influence is great. The impact of economicgrowth has negative and positive influences on financial scale and financial efficiencyrespectively, but their influence is small. The impact of investment level has a positiveinfluence on economic growth finally. The impact of workforces to economic growth is to bezero finally, after positive-negative oscillate. From the whole system perspective, foreconomic growth, the effect of financial efficiency to economic growth is higher than theeffect of financial scale to that. For financial scale, the effect of workforce is largest thanothers. For financial efficiency, the effect of financial scale is largest than others. Financialdevelopment has dynamic effect in both long term and short term, but this effect isinsignificant in short term static analysis, we can infer that reality is substandard. Finally, thispaper puts forward some policy suggestions on the coordinate development between financeand economies in Tongchuan city.