Research On The Relationship Of Market-oriented Interest Rate And Economic Growth In China

McKinnon and Shaw pioneered the theory of financial development which provide theoretical base of developing country’s market-oriented reform of interest. Marketization of interest rate plays a role in promoting economic development. Since1996, the interest rate market was officially launched in China. Until now, preliminary reform goals have achieved. However, any financial reform cannot be divorced from the entity economy. At present, China’s state-owned enterprises have not set up the real modern enterprise system and have a rigid monetary demand. But non-state-owned enterprises are the main body of market actually. They determine the allocation of resources based on profit maximization principle. The dual Structure of state ownership leads to the different interest rate elasticity between state-owned and no-state-owned enterprises which will bring influence to economic growth under the condition of marketization of interest rate. We assume that the no-state-owned enterprises have0interest rate elasticity and then to discuss the relationship of market-oriented interest rate and economic growth in this article.This article firstly put forward and verifies the hypothesis of0interest rate elasticity of state-owned enterprises which confirm the premise of this article. And then we analyze the balance of the capital market under the condition of marketization of interest rate. We also discuss the relationship of market-oriented interest rate and economic growth. Considering the actual conditions of our country, we build the model of market-oriented interest rate and economic growth which is suitable for the actual situation of our country by re-building of Harrod-Domer growth model. We select the sample data of market-oriented interest to make the empirical analysis. The results show that:(1) The effect of interest rate on economic growth is divided into two parts. One is the effect on investment efficiency, and the other is the effect on investment scale. Those two effects are different between state-owned and no-state-owned enterprises.(2) The dual ownership structure of China reduces the positive effect of market-oriented reform of interest. Finally some policy suggestion is brought for interest rate marketization of China. We consider that the market-oriented interest rate reform of should match the reform of state-owned enterprises, so that market-oriented interest can play a greater role in the economic growth.