Empirical Study On The Influence Of Financial Liberalization To Investment In Western Region

Financial liberalization has a great impact on investment. Financial liberalization, as a kind of institutional change process, can not only improve the market mechanism to mitigate financial repression, but also promote the inflow of foreign capital, which leads to cost reduction and increase in the level of investment of funds. However, a purely free financial market may also lead to financial fluctuations and even crisis. Economic development level of the west area is backward in national economic development pattern. So it needs further study on the relationship between financial liberalization and investment to find whether the advance of financial liberalization, such as reduction of government intervention, development of financial intermediary, and admission of foreign financial institutions, will produce adverse effects on the growth of west area investment and the improvement of investment efficiency.In the background of deepening reform of financial markets, as well as inadequate investment and poor efficiency of investment in the western region, this paper clarifies the effects and mechanism of the process of financial liberalization on investment, and spatial econometrics analysis method is used to study the overall level of financial markets and their specific effects on investment in three aspects on the basis of measure description of financial liberalization in the western areas.Conclusions of this study are due as follows:Firstly, the progress of financial liberalization in western area in general is on the rise. Especially, the level of financial liberalization and openness of the financial markets goes up quickly in recent ten years. However, the degree of marketization of government actions firstly increases and then decreases. Secondly, provincial in the western region has a significant spatial agglomeration effects, and the effects of the overall level of financial markets and three related aspects on aggregate investment are quite different. Third, the development of financial liberalization, financial market and financial openness contribute to enhance the efficiency of regional investment in the western region. But there are some differences in the impact on investment. Fourth, the process of regional financial liberalization in the west of China, the relationship between economic growth and investment is stable and significant, but the relationship between the financial opening index and investments is unstable.As can be seen from the above conclusions, there are some regional differences in the overall level of the western financial market and its impact on the three aspects of investment growth and investment efficiency, and causes of the differences, mainly related to the level of its economic development, the investment structure and about the level of financial development in the western region. Therefore, the financial market reform in the western region of reference can not be blindly east, but according to their own development characteristics implement targeted improvements.