Capital Market Development And Total Factor Productivity

Total factor productivity and financial development are two major driving forces of modern economic growth and important symbols of national or regional economic growth.In the view of long-standing imbalance in China's economic development,the level of total factor productivity in each area has become an important basis for measuring economic efficiency and economic development.Therefore,The major research issues are as follows: 1)What's the China's overall and inter-provincial total factor productivity level in the national and provincial perspective.2)what are the extents which the all national and interregional financial development contribute to the efficiency of social production in each area? 3)How is the marginal utility? These three issues constitute the core of this paper.Based on the theory of economic growth,the theory of total factor productivity and the theory of financial development,this paper makes a comprehensive review of the existing literature,to find out the mechanism and contribution of capital market to economic development and total factor productivity.Secondly,We use the method of Cobb-Douglas production function and the Malmquist index method to estimate the trend of total factor productivity and total factor productivity growth rate with the national and provincial panel data from 1978 to 2014.Then,the capital market(especially the stock market)was added in the economic model,to find out the extent of contribution from the development of capital market to total factor productivity,and to test the influence of economic openness,human capital level and fiscal expenditure on national and inter-provincial total factor productivity.Finally,we divide the inter-provincial areas into different economic development areas according to the degree of economic development,and study the marginal effect of the development of stock market in different areas.By using the method of panel quantile regression,we can find out the track of dynamic evolution of marginal effects.Through the above study we draw the following conclusions:Firstly,the China's stock market development influence on the total factor productivity can be divided into macro and micro levels.At the macro level,the stock market optimizes the financial structure,improves the efficiency of financial development,and promotes the promotion of total factor productivity to maximize social welfare through the allocation of resources and financing functions;at the micro level,the stock market by improving corporate risk,collecting information and enterprise monitoring those three ways to optimize the efficiency of resource using and enhance the level of social productivity.Secondly,overall,the national and inter-provincial total factor productivities are increasing year by year,but the volatility are strong,the quality of China's economic growth need to be strengthened.The level of total factor growth of the whole country and the province is lower than the level of economic growth,and the enhancement of the economic quality should be based on the enhancement of technological progress and innovation.Thirdly,the influence of stock market on the growth of total factor productivity is obvious,and the ability of the inter-provincial stock market conversing into real economy is better than that in the whole country.The enhancement of the stock market on the whole factor productivity is obvious in terms of scale,liquidity and efficiency.The influence of the province on the scale and efficiency is obvious.Fourthly,the difference between the different regions of our country is obvious on total factor productivities.The marginal effect on the development of the stock market to the total factor productivity is increasing first and then decreasing,showing an inverted U shape.This conclusion provides a theoretical basis for balancing the direction of interregional capital flows and maximizing the using efficiency of capital.