A Study On The Effect Of Financial Structure Optimizing On Industrial Structure Upgrading Of China

For a long time, our country has been faced with the urgent need of industrial structure optimization and upgrading to match the economic development request. Under the “New Normal” economic background, China is in the process of “climbing over the ridge”, we must deepen the reform and adjust the economic structure to achieve stable and healthy development. We still have the promising opportunity to seize the strategic chances to release the bonus, which demands us to upgrade the industrial structure. On the other side, finance shoulders the responsibility of national economy lubricant and should play a greater role in economy developing and industrial structure upgrading. Due to irrational financial structure, the lower efficiency of capital allocation and the lags, financial structure has not fully realized the influence on the industrial structure updating process. Thus exploring solutions to construct a reasonable financial structure and promote its role is imperative.This topic we discussed above has become a hot research theory and a series of results have been got about finance deepening, optimal financial structure and as well as its influence on industrial structure. Based on the work of previous research, this paper summaries the mechanism of financial structure optimizing on industrial structure upgrading, and states that capital allocation, risk diversification and credit creation are the three main mechanisms that promote the industrial structure upgrading. We use the provincial panel data of China from the year of 1995 to 2011 to conduct empirical research. The results indicate that financial structure optimization can effectively promote the upgrading of industrial structure, and the influences in different regions vary: from west to east it decreases gradually. Based on these results, this paper suggests that we should deepen the financial reform and build multi-level financial services system. The research provide theoretical and empirical evidence to understand the mechanism between financial structure optimizing on industrial structure upgrading, and may be helpful to understand some significant practical issues such as multi-level financial service as well as optimal financial structure.