Financial Service Trade Liberalization, Financial Efficiency And Economic Growth

Since the financial crisis, the demand of international market has declined sharply. Foreign trade, especially trade in goods, has been seriously challenged. In the post-financial crisis world, the global economic landscape is facing profound adjustment. Trade in services has become an important way to enhance the economic competitiveness of a country and the core strength to fight against the financial crisis. As an important part of trade in services, trade in financial services is related closely to a country’s economic growth and the development of macroeconomic policies, and has gradually become the focus of global economic development. Existing literatures show that in post-financial crisis world, financial services trade liberalization can indeed help developed countries out of financial crisis. But China, as a developing country, is facing a difficult restructuring, and has many problems, such as lack of necessary rules and regulations, financial inefficiency, poor supervision and many other issues. Under this kind of realistic background, research on whether financial services trade liberalization can promote China’s financial efficiency, and then facilitate the economic growth, takes on an important theoretic meaning and realistic values.Firstly, this paper reviewed the past literature in relationships between financial services trade liberalization, financial efficiency and economic growth, and then conducted a comprehensive visual analysis on the current development of China’s financial services trade. This paper has also analyzed theoretically of the relationships between financial services trade liberalization,financial efficiency and economic growth. Based on these,this paper established empirical models to inspect relationships of financial services trade liberalization, financial efficiency and economic growth. This paper used the relevant economic data of China during1997to2011, and used Stata12.0statistical software for data analysis. By. using financial efficiency as the media, this paper conducted empirical tests on the relationship between financial services trade liberalization and financial efficiency and the relationship between financial efficiency and economic growth. The results showed that:the relationships between financial services trade liberalization,financial efficiency and economic growth were significant positive. That is to say, the implementation of financial services trade liberalization can promote economic growth by improving financial efficiency. However, the empirical results also told us that the effect between financial services trade liberalization and financial efficiency is much deeper. On the contrary, although financial efficiency and economic growth showed a statistical significance, the coefficient between them is very small. It indicated that the impact of financial services trade liberalization to economic growth by enhancing financial efficiency is not great. Finally, the paper suggests that a modest liberalization of the financial services trade and improvement of financial efficiency are necessary.I think, by doing both, China’s economic growth will be improved effectively.