Financial Deepening And Firm Productivity

This paper mainly studies how the financial deepening process impacts on total factor productivity of the enterprises. Data envelopment analysis (DEA) method is used to calculate total factor productivity. And through the generalized moment estimation method, Dynamic panel data model is established to analyze the listed companies in Zhejiang province during the period of 2004-2012 about how total factor productivity is affected by the degree of financial deepening.In order to ensure robustness with the results of the analysis, the article introduces different financial deepening and total factor productivity metrics. The empirical results show that the degree of financial deepening significantly inhibited the listed companies of Zhejiang province’s total factor productivity.However, different financial deepening index show obvious differences effect on the total factor productivity. This paper argues that the reasons of financial deepening shows negative effect on total factor productivity of the enterprise are the non-market behavior of financial market, the lack of innovation mechanism and the low efficiency of resource allocation.