An Empirical Study Of The Relationship Between Bank Structure And Economic Growth In The West Of China

In China, our financial system is basic on banks, so commercial banks as financial intermediation play an important part in modern economic operation.Before the reform and opening-up, our banking industry is highly monopolized by the people’s bank of China. With the process of socialist market economic reform, the Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, and China Construction Bank as four specialized banks are resumed and established. In the eighties and nineties, the joint-stock commercial banks have been established. In addition, the urban credit cooperatives and rural credit cooperatives began transformed to the city commercial banks and rural commercial banks. And foreign banks came in China. Bank concentration decreased gradually, and increases the competition in the banking industry.The theory is that competition in the banking industry is conducive to the rational allocation of resources. As the economic development of the western region play an important role in regional coordinated development and the sustainable development of economy, we are trying to research the relationship between the structure of the banking industry and the economic growth in the western region.Taking a combination of qualitative and quantitative analysis methods in the empirical analysis, we analyzed the changes of the structure of the banking industry of Chinese western regions and the current status, to explore the trend of banking structure. In addition, we used the panel data model to study the relationship between the structure of the banking industry and the economic growth in the western region in the time span from1997to2006,10western provinces. The empirical analysis show that (1)the structure of the banking industry of Chinese western region and economic growth has a significant negative correlation, indicating that the reduction to structure of the banking industry in the western region can promote economic growth.(2) because the western region is underdeveloped region, the main driving force of economic growth to remain from the investment in large-scale projects and requires a lot of capital investment, moderate concentration in the banking industry is conducive to the economic growth in the western region.We give a few suggestions,(1) to maintain the economic structure and the structure of the banking industry is matched.(2) introduction of private capital to participate in banking.(3) to promote state-owned enterprises and financial system reform synchronously.(4) to strengthen regional financial regulators.