Research On Financial Restraint Index

Capital is the blood of the economy,finance is the heart of the economy.Finance plays an extremely important role in the process of economic development,the level of a country's financial evolution often determines the level of its economic development.From the perspective of macro system,financial system is the top-level design of the form,speed,and efficiency of a country's financing.Basing on the perspective of the relationship between the evolution of financial system and economic development,this paper probes into the background of financial restraint theory.Then combined with the actual situation of Chinese economic development,this paper analyzes the process of the implementation of Chinese economic and financial reform during the last thirty-seven years,and confidently believe that the financial system implemented by Chinese government is essentially a financial restraint system.According to the current situation of Chinese economic development,both financial liberalization theory and the theory of financial repression are actually not in line with the actual demands of Chinese economic development.Compared with financial liberalization and financial repression,financial restraint theory is the more moderate third roads,and it would be more adaptive to Chinese unique economic development which is in the transitional stage.Then the article elaborates the core elements of the financial restraint theory,including its mechanism,policy advocacy,policy implementation conditions and functions in theory.In order to have a more accurate understanding of the role of financial restraint policy during the process of Chinese economic development,this paper designs a set of relatively complete financial restraint evaluation system,then construct the membership function,and manage to get the Chinese financial restraint index during the year 2001 to 2015 in the end by using principal component analysis through SPSS 22 software.Then this paper compares the financial restraint index respectively with three economic data which is highly correlated with the Chinese economic development,including Chinese economic boom index,Chinese annual GDP growth rate and Chinese per capita disposable income growth rate.The results show that there is a high degree of correlation between the financial restraint index and the three major economic data.And the correlations have come across a process from positive to negative.Finally,according to the analysis above,the paper puts forward some countermeasures and suggestions to improve the financial restraint policy to promote the economic development.Through a comprehensive interpretation of the theory of financial restraints,this paper grasps the connotation of the financial restraint theory,and takes a further step in promoting the evaluation system of the extent of financial restraint policy implementation.In this paper,firstly,the monetary multiplier(MM)and the indirect financing ratio(IFR)are included in the financial restraint evaluation system.This paper integrated methods of previous research on financial liberalization index,and uses actual economic data,which reflects financial restraint policy in a more accurate way,to calculate the financial restraint index,which is a new exploration in the method of research in the financial restraints field.