Research On The Scale Effect Of Financial Development

After the out-breaking of the subprime crisis in 2008, a large number of financial institutions bankrupted, combined and reorganized. Major capitalist country’s financial systems were in crisis, and then gradually spread to the real economy, resulting in a significant decline of the worldwide economic indicators, and ultimately to the major capitalist countries. The financial crisis evolved into a world-wide economic crisis. Affected by this financial crisis, national economists and financial experts began to reflect deeply. From the original patch on the theory and practice of economic and financial system, they studied the financial supervision, financial security, virtual economy and the problems in the real economy proportion. Furthermore, they studied the overall financial development to explore the relationship between the financial system and economic system, which is relatively low. This study analyzes the financial development on economic growth. From the macro and micro point of view, it explores the financial development of the overall size of the expansion, contraction motivation, and the financial scale of the development of the basic theory of finance theory, which provide a theoretical basis for the overall financial control, and economic structure control.This paper uses the methods of the oretical research, empirical research and countermeasures, which can be divided into the following areas:In the first chapter, it presents theoretical draw and the theoretical framework, including the five major theories, that is, the financial development theory, the theory of financial markets, economies of scale theory, the theory of system structure, and the human capital theory. From the total scale of macro-financial point of view, micro-finance enterprises scale angle and the real economy and virtual economy point of view, it builds the theoretical basis of the financial development of scale;The second chapter examines the evolution of financial development scale, the world financial development of the operational status of the economies of scale. From the United States to China, as the representative of developed and developing countries, the author analyzes the financial development of scale "positive effect" stage and the "negative effect" on stage to make the analysis of last static and dynamic financial development.The third chapter analyzes the financial development of scale. From the perspective of human capital, it builds an empirical model, re-uses panel data from the proportion of the financial scale and financial professionals accounted for two perspectives on the OECD between 1980 and 2007. In the 23 countries, it demonstrates the existence of the financial development of scale quadratic (inverted U-shaped) curve.The fourth chapter analyzes the scale effect of financial development mechanism, from the four aspects, that is, the financial incentives for development of economies of scale, the restraint mechanisms, the regulatory innovation mechanism, and the strategic synergy mechanism.The fifth chapter is the conclusions and policy recommendations. First of all, from the "threshold effect" of the financial scale of development stage, the stage of the "positive effect", and the "negative effect" stage it analyzes the four aspects of the Institute’s argument, and then from the country’s financial development strategy, competition in the financial market, financial market supervision, and the division of the international financial point, the author puts forward the corresponding countermeasures and suggestions.In this study, the use of contact, system analysis method to build the theoretical framework of the financial development of scale, from the macro-and micro point of view of the financial development of the economies of scale inherent mechanism; followed by the use of historical materialism and describe the method of statistical analysis,evolution of the development of the world’s financial economies of scale; Finally, mathematical the economic derivation method and panel data model analysis methods, from the perspective of human capital to build a theoretical model of the effect of the financial scale of development, and empirical analysis, concluded as followsConclusion:Compared with the two sets of indicators of financial development scale level, the proportion of financial value added to total value added and financial employment proportion of the total amount of employment, direction and theory of both per capita GDP growth forecast is consistent, that financial development scale level of economic growth is quadratic (inverted U-shaped), and is not linear. In the initial stages of the development of financial markets, financial market system is not perfect, the low level of economic development, financial development of the economies of scale advantage failed to give full play to the role can not afford basic economic costs required in the process of financial development, economic development may trapped in a "poverty trap", the scale of financial development and economic growth relationship was not significant. Once crossed the "threshold" of economic development, financial development scale advantages gradually revealed through Saving and capital allocation effect, an increase of capital accumulation and improve the technical level, financial development benefits more than the cost of its development, and ultimately has contributed significantly to economic growth. However, when the proportion of financial development scale beyond a certain proportion of the financial sector to absorb too much human and physical capital, will lead to a lot of the real sector investment extrusion, at this time, but not excessive expansion of the scale of the financial development conducive to sustained economic development.In this paper, the policy recommendations include the following aspects:1、the development of the country’s financial development strategy to improve the international competitiveness of the financial industry:first, the development of the financial scale of development strategy, with the scale of economic development; Second, to develop a coordinated strategy of financial development, so that with the development of other industries The strategic match; third, the development of financial development strategy so that the scale of financial development and economic development entities to match the scale.2、adjust the size of the micro-finance enterprises, to promote effective competition in the market economy:First, the financial enterprises should develop its own development strategy, rational planning of the size of their own development; Second, a reasonable allocation of the scale ratio between the financial enterprises, promote financial market effective competition.3、to strengthen supervision of the financial scale of development, economic and financial security: first, to establish the scale of the development of macro-financial regulatory mechanism, and guide the sustained and stable growth of the financial scale; Second, to establish the regulatory mechanism of the scale of the development of micro-finance enterprises, and guide financial enterprises sustained and healthy development.4、the coordination of international financial division of the scale layout, improve the international financial market environment:First, the study of international economic, financial trends, grasp the inherent law of the international financial scale of development, provide a reliable basis for the scale of international financial rational division of labor; Secondly, to strengthen international financial cooperation, planning and the world financial division of the scale of the layout of the national economy, regional economy, the level of world economic development consistent; third, to improve developing countries’financial development of the external environment, moderately increase the proportion of its size, in order to promote the development of countries in the establishment of the financial market system.