The Optimal Financial Structure And Economic Growth

There is some correlations between financial structure and economic growth, which is generally recognized by academic circle and accorded with empirical facts in the worldwide. Thus, from bank-based and market-based financial structure, which type is more beneficial to economic growth? Whether there is an optimal financial structure? As factor endowments changes and industrial structure adjust in China, bank-based financial structure has been facing lots of challenges. Selection and optimization of the financial structure become the key to construction and development of domestic economic Systems. Firstly, this article theoretically analyzes the formation mechanism of the optimal financial structure as well as its deviation impact elements. It proposes factor endowments and government actions determinism. Then it recall the historical evolution of Chinese industrial structure and financial structure which are found that the optimal financial structure theory basically corresponds to actual situation. Afeter that, by using the panel data of the Prefectural-Level cities in three metropolis circle (Yangtze River Delta, Pearl River Delta, and Beijing-Tianjin-Hebei Region) from 2005 to 2014, building the nonlinear dynamic and linear dynamic panel models, and using the System GMM estimation to conduct empirical tests. At last, based on theoretical and empirical research’s results, this paper provides corresponding reasonable policy suggestions on how the actual financial structure optimize the structure level.The results of this paper indicate that:(1) The optimal financial structure exists in China, which is expressed as "inverted U" type relationship between financial structure and economic growth; (2) Our country’s actual financial structure has the internal demand to improve to the optimal financial structure and raise the relative proportion of direct investment; (3) Our country’s financial structure plays a dynamic roll in the economy though matching to industrial structure; (4) Government behaviors have impacts on our country’s industrial structure and affect the matching financial structure.