The Study On The Impact Of Financial Development On Manufacturing Performance In Sichuan Province

For a long time, the relationship between financial development and economic growth are under a heated discussion among scholars. From the current studies, most scholars believe that there exists a relation between them. Based on this assumption, this paper takes 21 sub-sectors of manufacturing industry as the research object, and then tests the relationship between financial development and economic growth based on the industry level in Sichuan Province during 2003-2013.Firstly, this paper reviews financial development theories and industrial organization theories, and elaborates the mechanism of financial development on industrial performance. Secondly, in order to know the current situation of financial development and manufacturing performance in Sichuan Province, this paper conducts horizontal and vertical comparative analyses by using the relevant data, and measures the external financial dependence of 21 sub-sectors of manufacturing industry. The study finds that Sichuan’s absolute scale of total amount of finance is currently large and grows rapidly, but financial development efficiency and enterprise profitability need to be improved urgently, and financial development structure still needs to be optimized. Then, on the basis of the classical model of financial development and industry growth introduced by Rajan and Zingales, combining the SCP paradigm of traditional industrial organization theory, this paper takes the product of financial development level and external financial dependence as the key explaining variable, and treats location quotient, scale economy, necessary capital amount, capital intensity and the proportion of state capital as control variables, so as to conduct a panel data model.The empirical results show that the impact of financial development on manufacturing performance is limited in Sichuan province. In particular, financial development scale has a negative impact on manufacturing performance, but this effect is not obvious. The impact of financial development efficiency is significantly positive. Also, the optimization of financial development structure contributes to improve manufacturing performance. Finally, according to these conclusions, this paper puts forward some suggestions on promoting manufacturing performance such as improving the supporting mechanism of market-oriented interest rate reform, strengthening the construction of financial institutions, promoting the development of various financing methods and Internet finance, deepening the reform of state-owned enterprises and maintaining the appropriate scale of enterprises.