The Study Of Correlationship Between Bank Credit And Economy Development

In a country’s financial system, the banking system undoubtedly occupies decisiveposition. However, the credit flow of the Commercial Bank in our country isunreasonable, and industry distribution exists relatively large imbalance. This situationis more obvious in Shanxi province. Shanxi province is an important coal industry basein China. The vast majority of the credit funds flow into the coal, electricity and otherenergy industries, while being a smaller support for the agriculture and the third industry,which forms the economic structure of Shanxi province based on energy industry. Infact, besides the heavy industry, agriculture industry in Shanxi province also plays avery important role. Therefore, the support of credit funds in commercial bank isparticularly important. Other industries such as transportation, real estate, serviceindustries in recent years have also been rapidly developed with the acceleration of theurbanization process in Shanxi. At the same time the input of credit funds in commercialbanks has increased year by year.Economic growth not only includes the quantity growth, also includes improving thequality and structure adjustment. Economists believe that, the flow of bank creditdetermines the allocation of financial resources, which has a profound impact on thereal economy development. The development of an industry needs a large amount ofcapital investment. Bank credit funds flowing into which industry and flowing into howmuch, is critical to the development of the industry. These financial resources determinethe development of an industry now and in the future, and even determine the economicstructure of a region. But the existing literature rarely study the relationship betweenbank loans and the development of entity economy. The study which involves bankcredit and the development of the regional economy is even less. The study on therelationship between regional credit structure and economic growth is essential, and hasa significant meaning for the regional economic structure adjustment and the sustainabledevelopment of the regional economic.This paper attempts to take the relationship between bank credit flows and the realeconomy development for an example, and interpret the relationship in theory and inpractice, then further analyze their relationship.At present, because of the great changesin the domestic and international economic situation, Shanxi’s economy is goingthrough a critical period of transformation development. The uncertain of international economic situation and domestic economic structure adjustment lead to the gradualdecline of Shanxi’s traditional economy system which is based on coal resources, andthe establishment of a new economic system is not clear. In this case, the establishmentof bank credit flow system that is reasonable and effective, has a very important role inthe diversity of market main body, optimizing the allocation of resources, andadjustment of the economic structure. More importantly, based on the analysis of therelationship between the flow of bank credit and the real economy development inShanxi, the paper put forward specific measures to optimize the credit structure andpromote real economic development, which can not only promote the development ofthe real economy in Shanxi Province, but also can provide a reference for otherresource-based economy area. Therefore, from the respective of financial structuretheory, regional economy, theory of industrial organization and so on, employing thecombinations of theoretical analysis and empirical analysis, qualitative analysis andquantitative analysis, historical analysis and reality analysis, and other research methods,the paper analyses the relationship between bank credit flow and regional economicdevelopment, which has certain practical significance. Furthermore, all of these days,exploring the proper banking system of economic development in various countries orregions is a hot issue discussed by domestic and foreign economists. Therefore,studying and analyzing this problem from theory and practice, can not only enrich therelated theoretical results, but also can provide further reform of the banking systemfrom theory and practice.In the empirical analysis, this paper uses the unit root test, cointegration test, errorcorrection model, Grainger causality test, and variance decomposition research methodsto study the data of Shanxi province from1978to2009. The empirical research showsthat: in the long term, each industry loan has a positive influence on the change of thecorresponding industrial output value, but the degree of effect is different. Therefore,using the method of increasing capital investment can increase the added value ofoutput. However, various industrial loans and increase of output worth contribution arenot consistent. Therefore, the attention is needed to pay as the changes of time andsituation when investing.