Research On The Relationship Between Financial Development And Economic Growth In Shandong Province

The social development and political stability can not be separated from the economic growth.As the core of modern economy,it is an important communication channel of various factors of the market. The financial development is vital to the economic development.Since the 1970 s,the study of the relationship between financial development and economic growth has become the focus of many western economists.The scholars work on whether there exists a causality between the two and which is the cause.The objects of the research are mainly developed and developing countries,not including China.The results of the research have led to many valuable points and conclusions.After long-term empirical studies,most scholars believe that a mature and stable financial system is an essential part of economic growth.The western research of the relationship is of great importance to our scholars at home.Our research in this field is booming.Based on the theory of the western research,the empirical study at home employs a good many Western economic models and ways of measurement.There are less studies of this kind,if any,which aim at the whole country and gradually get down to the provincial and civil level.Shandong is greatly populated and economically strong, with a typical economic structure. Compared with the economic growth of Shandong Province,the financial development is lagging behind.Nowadays,faced with the transformation and upgrading of the local development,Shandong Province has implemented a financial revolution with the theme of “accelerate the financial development and expand financial space”.So,it is invaluable for other provinces to study the relationship between financial development and economic growth.This paper contains seven parts.The introduction part introduces the background,the innovation and shortcomings, research methods and an overview. The theoretical part reviews the theory of the financial development and economic growth as well as the empirical study at home and abroad.The third part analyses the mechanism and model as a result of the interaction between them. The forth part introduces the national economy and the financial sector.The fifth part,through a series of empirical studies,goes through the relationship between them.The sixth part lists the contribution of various fields like banks, stocks and insurance to the development of the economy.The last part puts forward some proposals for financial reforms in Shandon Province.On the whole, the conclusion of this paper is that the financial development and economic growth are closely related.The financial development plays a significant and long-term role in promoting the growth of the economy, but not as much as the way around.For different financial industries,the economic growth and the deposits and bank loans have contributed to each other.It shows in that the economic growth has increased the deposit ratio,which in turn restrains the former.There exists a weak relationship between the economic growth and the concentration of the bank.The impact of the economic growth on the funds raising is flexible. Furthermore, the economic growth also promotes the insurance penetration mutually.The main research methods include data modeling,linear regression,and causality test.