A Research Of The Impact Of Loans On China’s Industrial Output

Industrial economy has being one of the most important component of certain economic entity since the Industrial Revolution. Elements that have direct or indirect influence on economic development are more and more complicated as time goes on, but no economic can survive without capital. For a long time, enterprises of China can only finance through one way, to take a bank loan, as the financial system of China was not as well as those of America and Europe. Now that the reforming and innovation of China’s financial system is going further and further away, To notice what kind of change has happened to the influence of loan to the output of industrial economic is significant for our economy.In this article we will discuss the difference between the influence of loan upon industrial economic with different system of ownership and different category. The research method we will use are Generalized method of moment(GMM) and Generalized least squared(GLS). The mathematic model we will use are Dynamic panel model and Varying-coefficient Models. Sample data used in the research is panel data of 39 different industrial category from 2001 to 2011. Those research are at such different angle as 1.The influence of loan to the total output of China’s industrial economic; 2.The influence of loan to the output of different system of ownership of China’s industrial economic; 3.The influence of loan to the output of different category of China’s industrial economic; 4. The influence of loan to the output of different category of China’s industrial economic in different category. Each of the research is going on in two ways one is about the influence of loan to the output of the same year, the other is about to the output of the next year. Simple result of those research are:1. The total influence of loan to industrial output is remarkably positive at the same year, remarkably negative-going. The absolute value of the coefficient to the next year greater than that of the same year. Showing that the majority of the input of industrial loan has been invested to short time productive projects.2. The result of total influence of loan to the output of different industrial with different system of ownership showing that the influence to individual economy was remarkably positive at both of the same and the next year. The influence to state-owned and state-owned Holding economy is similar with the total influence of loan to industrial output. The impetuses of loan to output of state-owned and state-owned Holding industrial economy was the worst among all system of ownership.3. Research of different category shows that most of the best influence that loan have to individual industrial economy concentrate in light industry, communication and transportation equipment production and electrommunication equipment production. The best influence that loan have to state-owned and state-owned Holding industrial economy concentrate in heavy industry. To economy with other sort of ownership, the influence doesn’t have clear clue.The result of this paper don’t support input more loan capital to China’s total industrial economy as the result shows that the total influence of loan to industrial economy had been negative for a while. To use the loan that had been determined to put into industrial economy, I suggest allotting more loan to individual industrial economy. Reduce the input to state-owned and state-owned Holding industrial economy. Allocating of loan among diffident category of industrial, I suggest allotting more to light industrial which have the ownership kind of individual owned.