The Empirical Research Into The Influence Of Financial Development On Economic Growth Quality In China Based On The GMM Model

Finance plays more and more important role in modern economic system. Goldsmith points out that "In the financial field, if the influence of financial development on economic growth is not the most important issue, it is also one of the most important problems." Measuring the level of financial development includes not only the expansion of financial scale, but also the optimization of financial structure.Since 2000, financial scale measured by the M2 / GDP remains above 130% in China.The expansion of finance scale can mobilize residents to deposit and then provide funding support for economic growth.At the same time,financial structure in our country changes gradually. On the one hand, the establishment of small and medium-s- ized commercial banks breaks the monopoly of the big four state-owned banks and intensifies the competition among banks, on the other hand, the improvement of securities market broadens the financing channels of enterprises and improves the efficiency of resource allocation. It means that financial development plays more and more important role in economic growth. However, existing literature researches on the relationship between financial development and economic growth tend to equate economic growth with GDP simply,which are lack of the quality of economic growth. It is a pity that this happens in China which needs to transform the pattern of economic growth and solve the problem of economic growth.Therefore,based on financial development as the research object, the paper discusses the influence of financial development to economic growth quality which can not only enrich the research in the filed, but also promote the healthy development of financial industry and make it serve the quality of economic growth.On the basis of introducing the background,significance of the research,overview of domestic and foreign researches in this field,the manifestation of action between the evolution of financial development and the economic growth quality will be analyzed by the AK model of endogenous economic growth theories.Considering the focus of this study,the manifestation of the financial development includes financial scale, financial structure which consists of the structure of financial industry and the structure of financial market.These three will affect the quality of economic growth by acting on marginal productivity of capital,deposit investment conversion rate,saving rate.The empirical analysis of the steps are as follows:Firstly,the measure index of financial development can be divided into financial scale, bank concentration, the proportion of direct financing and the quality of economic growth can be empirically divided into the following four aspects:the structure of economic growth,the stability of economic growth,the welfare of economic growth and the sustainability of economic growth with reference to relevant literature.Then the composite index of economic growth quality can be computed by principal component analysis.Finally,the SYS-GMM model can be constructed with the composite index of economic growth quality as dependent variables and financial scale,bank concentration and the proportion of direct financing as explanatory variables.The result shows that financial scale and bank concentration have a negative effect on the quality of economic growth while the proportion of direct financing has no influence on improving the quality of economic growth.According to the results,decreasing financial scale moderately,decreasing bank concentration and improving the financial supervision system are suggested.