The Impact Of Finance Development On Industrial Upgrading

With the globalization of economy,every nation is doing its best to accelerate innovation of technology and industrial distribution,The development of internet and artificial intelligence has brought many new opportunities to industrial upgrading.Meanwhile,the industrial upgrading of China also faces many challenges,the rapid growth in the past is at the expense of the environment resource and others resources,the consequence is the excess capacity and the unreasonable industrial structure,Industrial upgrading is the way to realize sustainable development of economics.Finance is the main part of economy,which influences the economy by the allocation of money,the industrial upgrading also needs the allocation of money,the development of finance provides money support for the industrial upgrading,Therefore,in order to realize the transformation of industrial structure,exploring the influence of finance development on industrial upgrading is particularly important.The existing literatures not only study the connotation,denotation and the calculating method of finance development,and the connotation,denotation and evaluation method of the industrial upgrading,but also analyze the impact of the change of finance development on industrial upgrading.These literatures deepened the understanding of finance development,industrial upgrading and the relationship between them,and provided solid foundation and useful inspiration for further study.After recovering the papers,some shortages are founded: the definition of finance development is not so clear,and the finance development index is hard to choose;the definition and denotation of industrial upgrading have no unified understanding,and concepts of industrial upgrading are used chaotically;the mechanism that finance development affects industrial upgrading is still unclear,and the explaining of reality problems are weak.This paper defines that the development of finance is the improvements of financial function,and the industrial upgrading includes the improvement among industries and the climbing of value chains.Based on the function of finance,this paper analysys the way that finance development influences the industrial upgrading,and then put forward that the development of finance is the path to realize industrial upgrading.Finance plays the role of the allocation of money,risk aversion and the choice of industries through banks,stock market and insurance market,which aspects the allocation of resources and then acts on industrial upgrading.Based on the theoretical analysis,This paper use 31 provinces' panel data between 2001 and 2014 to evaluate the development of finance and the process,speed and direction of industrial upgrading,and use 31 provinces' panel data between 2001 and 2011 to evaluate value chain.Based on the evaluation,and then use the system GMM method to evaluate how the development of finance influence industrial upgrading in overall return and sample return,and arrive the following conclusions: Firstly,the development of banks has a positive correlation with the status of value chain,has a negative correlation with the direction of industrial upgrading,when the banks improve 1%,the status of value chain increase 0.2776%,the direction of industrial upgrading decline 0.4644%,the impact that the banks influence the process and speed of industrial upgrading is not significant;Secondly,the development of stock market has a negative correlation with the speed of industrial upgrading,and has a positive correlation with the status of value chain,when the stock market improves 1%,the speed of industrial upgrading decline 0.0053%,the status of value chain increase 0.0014%,and the impact on process and direction of industrial upgrading is not significant;Thirdly,the development of insurance has a positive correlation with the speed of industrial upgrading,has a negative correlation with the process and direction of industrial upgrading.when the insurance market improves 1%,the speed of industrial upgrading increase 0.1790%,the process and direction of industrial upgrading decline 0.1392% and 0.7481%,the impact that insurance market influence the status of value chain is not significant.Overall,the following suggestions will be put forward to promote industrial upgrading in China: Firstly,banks should be encouraged to increase investment in emerging industries,and the mode of bank should be innovated;Secondly,the supervision of the stock market should be strengthened to improve the status of value chain;Thirdly,the system of insurance market should be improved to enhance the speed of industrial upgrading;Fourthly,the measures should be maked adjusted to the local conditions to match the development of industrial upgrading.