Research On The Efficiency Of Financial Development On Improving Economic Growth:Measure And Improvements

Along with the acceleration of economic financialization, the financial sector has become one of the pillar industries of national economy. However, it is worthy of attention that China’s economic growth and financial development have stepped into a particular stage, that is to say, the slowdown of macro economic speed, the decline of industry corporate profits, the activeness of financial speculation, as well as the expansion of financial profits, reflecting the intensifying of contradiction and conflict between real economy and virtual economy in our country. On the one hand, the rapid development of finance (or even excessive prosperity) produces financial bubbles and industrial hollowing-out, which causes widespread anxiety. On the other hand, it is quite difficult to get rid of the reality of "workshop of the world" and "doing dowry for others" based on the export oriented development model, which is depending on numeral expansion, resource consumption, environmental pollution, combined with low value-added. Moreover, the global recession caused by the financial crisis also makes this model unsustainable. The growth model driven by high savings and investments increasingly causes deep reflection on the sustainability of growth sources and the credibility of mainstream macroeconomics (Blanchard et al.,2010). Therefore, the relationship between financial development and economic growth is not melely a quantitive one. Based on the efficiency dimension, regaining and focusing on the efficiency of financial development on improving economic growth (financial efficiency) become dominant strategy at this stage. For these reasons, exploring the relationship between "virtual" and "real" under the efficiency dimension will help give full play to the catalytic function of financial development in promoting the entity economy transformation and upgrading.As contradictions and conflicts between the real economy and the virtual economy are growing in China, the scientific issues of the efficiency of financial development promoting economic growth is refinned focused on in this article, especially how to enhance the level of technological innovation of the real economy. Therefore, followed the logic of theoretical analysis, empirical test, optimization mechanism, based on a combination of normative approach and empirical research, staring from the reality of China’s financial efficiency, making the optimization of financial efficiency for the purpose, research on financial development how to promote the transformation and upgrading of the real economy is studied, in order to provide decision-making ideas and empirical supports to national policy formulation and adjustment. In theoretical analysis, based on the financial division theory and the endogenous financial development theory, use Deidda model to investigate the mechanism of endogenous financial development to promote economic growth at the macro level. Based on this, the concepts of "efficiency of financial development on improving economic growth"("financial efficiency") and its decomposition efficiencies ("financial allocation efficiency" and "financial innovation efficiency") are put forward. Meanwhile, based on the combination of corporate financialization theory and government intervention theory, the theoretical analysis framework how nonfinancial firm’s financialization affects technical innovation is built, to provide a microeconomic basis for empirical analysis and optimization path of financial efficiency. In the empirical test, based on the results of financial efficiency measured by Malmquist index method, the influencing factors and the transfer mechanism in China are tested empirically by using the method of panel co-integration at the macro level; besides, the influence of corporate financialization on the level of technological innovation and the role of government control playing on this influence are researched based on the financialization theory at the micro level. Finally, based on the robust conclusions empirically tested, optimization measures to improve the financial efficiency in China are put forward.Conclusions:(1) Financial allocation efficiency and financial innovation efficiency are two important parts of financial efficiency, and they have different effect mechanism on the efficiency of economic growth.(2) Financial efficiency in China is still low and lack of obvious improvement. The influence of China’s financial development on economic growth is still limited to the stage of quantity expansion and factor accumulation; however, the shortage of financial innovation efficiency is the key strangulation reason of the improvement of financial efficiency.(3) There are typical characteristics of economic region and financial control in financial efficiency distribution. What’s more, the degree of financial control influences the enhancement of financial efficiency, especially weakens financial innovation efficiency.(4) Financial structure, dual economic structure, ownership structure, credit degree of intervention of the central government and financial marketization process are the primary macroeconomic variables that influence the financial efficiency in China. Among these variables, the financial structure and the ownership structure affect the financial efficiency via promoting the financial innovation efficiency; the dual economic structure cumbers with the financial efficiency by lowering the financial allocation efficiency. On the other hand, the credit degree of intervention of the central government and the financial marketization process not only enhance the financial allocation efficiency, but also advance the financial innovation efficiency. However, there is evidence that the positive effect of the financial marketization process on the financial efficiency is hampered by the central government intervention in credit system.(5) The empirical analysis based on the panel data of Chinese listed companies provides a reasonable explanation for low financial innovation efficiency in China:Along with the deterioration of development environment of manufacturing industry in China, the increasing pressure in profitability and innovation, the shrinking of main business, and the activity of financial speculation, excessive financialization has a relatively significant inhibition of enterprise innovation ability and willingness; however, the government control further enlarges this negative influence of the non financial firm’s financialization on the technological innovation, leading to the effect of overall financial development promoting technology innovation being insufficient, resulting in financial innovation efficiency being low.Based on the above conclusions, the idea of optimizing financial efficiency in China locates eventually in the promotion of transformation and upgrading in both economy and finance. Suggestions:(1) Control overcapacity situation.(2) Foster innovative mechanisms.(3) Deepen market reforms.(4) Inhibit financial speculation.