Demonstration Of Finance Development And Economic Growth In Northeast China

Economic growth is the precondition of social development, political stability and improvement of people’s living standards, and finance is the core of modern economy, so the relationship of the finance development and economic growth has been the hot topic in western scholars. With the further research of this issue, current prevailing view is that a region’s economic growth is closely related to the level of financial development:The expansion of financial assets and the improvement of financial efficiency can promote economic growth through lowering transaction costs and improving the efficiency of resource allocation; In turn, the economic growth can promote finance development through increasing the demand for financial assets and improving the quality of financial services. Compared with the abroad, this issue in China starts later and most of the research literature is mainly focused on the national level or financial relatively developed coastal provinces and cities and few scholars focus on the northeast region, so the research on the situation of northeast has important theoretical and practical significance.Depending on the abundant natural resources and the country’s policy support, Northeast China Region got rapid development at the beginning of the founding of new China, especially in the aspect of heavy industry, so it plays a significant role in the process of economic development in our country, but with the continuous consumption of resources and the rise of other industrial base, the economic of Northeast China Region declined. In 2003, under the background of "revitalization of the northeast old industrial base", the economic of Northeast China Region has rapid development and the industrial structure has continued to deepen, however, financial development is not able to keep up with the pace of economic growth:the scale of financial assets is relatively small; although financial efficiency has been improved, the capital market structure remains to be perfect; financial industry output value contribution rate is relatively low and all of these hindered the further growth of economy in northeast China. Therefore, choosing the backward financial development level as the breakthrough point and based on the financial scale and efficiency improvement, this paper discusses the correlation between financial development and economic growth in northeast China and puts forward appropriate proposals.This paper includes five parts:The first part is introduction, which firstly introduces the research background and research significance, then reviews and summarizes the literature at home and abroad and finally explains the research methods, innovation and deficiency of this article.The second part firstly discusses the connotation of financial development and economic growth and then analyzes their correlation from the perspective of theory: No matter in terms of financial economic function or endogenous growth model, financial development can affect economic growth and economic growth can also affect the scale and efficiency of financial development to a certain extent.The third part analyzes the situation and origin of economic growth and financial development:Firstly this part analyzes the achievements and existing problems of economic growth in northeast China from the economic aggregate, industrial structure, comparison with the other regions and then measures the level of financial development in northeast China from the perspective of financial scale and efficiency improvement, which creates the preconditions for empirical research.The fourth part carries on the empirical research about the relationship between the financial development and economic growth in northeast China. Choosing real GDP to measure the level of economic growth, financial ratios to measure financial development scale, savings mobilization capacity and saving investment conversion rate to measure the financial efficiency, and through the econometric methods of cointegration test, VECM, impulse response function and variance decomposition, this paper finds that financial development has a positive role in promoting the economic growth in northeast China and the promoting effect of finance efficiency is superior to the scale of financial development, but in turn, economic growth has no obvious influence on financial development.The fifth part is conclusion and policy recommendations. It first summarizes the previous parts and then puts forward appropriate proposals based on the situation of economic growth and finance development and the empirical research.