A Study On The Relationship Between Financial Development And Economic Growth

Great progress in economic growth has been achieved during the past 20 years after economic reforms in China, but the difference of the development of financial and economic growth in different region of China is more and more obvious.To coordinate the relationship between financial development and economic growth is a major problem we are currently facing.In order to study the specific relationship between financial development and economic growth, we first sort out and summarize the previous research literature.The paper respectively selects the panel data of 31 provinces in the east, middle and west region of China over the period 1993-2012.Firstly we conclude the ways to promote economic development through financial development.Secondly we describe the difference between the east, middle and west region with the financial development. And then we use the panel data demonstrate the relationship between financial development and the economic growth. Finally we make some relevant recommendations according to above analyses: increase investment in backward areas;improve the bank’s management system and coordinate the development of the region by a differentiated management; optimize the structure of financial industry; focus on the relationship between financial liberalization and economic development.