The Impact Of Financial Development On China’s Entrepreneurship

Entrepreneurship is becoming a great motivating factor for the economic growth in each country in those years. And how to promote the entrepreneurial activity in our country has become particularly important. As all we know, financial development plays a key role for supporting entrepreneurship. A more perfect financial system can not only provide new venture with finance support, but also optimize the allocation of resources, encourage competition, improve efficiency and so on. But compared with the state-owned enterprises, most of the new enterprises are facing serious financing constraints in China in recent years, and the better operational mechanism between the finance support and entrepreneurship has not been formed. Therefore, the aim of the paper is form the perspective of system innovation, combining with theory and empirical analysis, to explore the underlying reasons of the financing constraints in our country.First of all, the article would introduce the summarizing theory of entrepreneurship, financial development and financial system innovation and their measurable indicators. Based on the theoretical research, this paper uses China’s31provinces panel data, which from1998to2009, to verify the specific impact of entrepreneurship form financial development. The empirical study indicates that financial institutions have an important role in promoting entrepreneurship, and there is no significant effect form capital market development. Given this, it is necessary to analysis the main causes of the system deficiency. The article combines with the status quo of China’s financial system innovation and sets up the finance system innovation index of China to analysis and then identifies the financial obstacles which restrict the development of entrepreneurship. The result shows that financial system innovation is dominated by financial institutions in China, and financial regulation and financial market failure to achieve synchronous development; this is the main barrier. Finally, this paper puts forward several policy proposals according to the research conclusion. Through the financial system innovation to eliminate the existing system obstacle, and establish linkage mechanism of financial institutions, financial markets and financial regulation to promote optimal allocation of financial resources, make sure the finance development can better support entrepreneurship.