Finance, Ownership Structure Adjustment And Growth

Since the reform and opening up, China’s economy has made remarkable achievements.However, along with the rapid economic development is the imbalance of economic growth in theregion. In addition to geographic location, tax incentives and other exogenous factors, the gapbetween the level of economic development in the region are also to some extent, shows theimbalance of the market process and financial efficiency of resource allocation. Therefore, in thecontext of the process of the market represented by the ownership structure adjustment, to focus onthe eastern, central and western regions of financial development differences lead to economicgrowth gap is very necessary.In this paper, following with the ownership structure adjustment, from a theoretical andempirical perspective to examine the relationship among financial development, ownershipstructure adjustment and economic growth in China’s different regions. On the theoretical side, thedifferent entities and the financial sector in the eastern, central and west regions efficiency toexplain the reasons for the differences of financial growth effect; taking into account the impact ofthe financial leakages and non-formal financial capital flows between enterprises and regions, in-depth financial transmission mechanism of the development of regional disparities. In the empiricalside, using1978-2010Year Provincial data, not only grasping the macro result,but also analysisdifferent regions ‘comparative result, and finally take Granger causality test to examine thefinancial development of the eastern, central and western regions and the ownership structureadjustment the effects of economic growth.Through empirical research the following conclusions: finance can not promote economicgrowth obviously. But taking into account the ownership structure can also be part explain thepromotion and low financial efficiency. Moreover, eastern region shows the largest effect, then thecentral region, and western region is the last. From Granger causality test, economic growth drivesthe financial development, and financial development can not promote economic growth.Therefore, to make sustained economic growth, not only pay attention to the reform of finance, butalso focus on the efficiency of enterprises and the industrial structure.