The Impact Of Financial Development And Government Intervention On China's Capital Allocation Efficiency

The report of the 19 th National Congress of the Communist Party of China clearly stated that China's economy has shifted from a high-speed growth period to a high-quality development stage,which has pointed out the direction for the development of China's economy.The quality of economic development depends on many factors,and the core is the efficiency of resource allocation.Capital is an important production factor,the allocation of capital plays an important leading role in the allocation of other factors.If China's economic development wants shift from high consumption,high pollution and high growth to low consumption,high quality and high efficiency,greatly optimizing capital allocation and improving capital allocation efficiency are necessary.Under market economy conditions,to improve the efficiency of capital allocation,we must develop and improve financial markets.On the other hand,the “invisible hand” of the financial market also has limitations and shortcomings.Objectively,it requires effective use of the role of the government to compensate for the failure of the financial market.Since the implementation of the reform and opening up,China's financial market has developed rapidly,and the multi-level capital market has been initially established.It has played a positive role in promoting the optimal allocation of capital,however,China's financial development is still insufficient,and the financial market is still not perfect.The Chinese government has played an important role in capital allocation,but the phenomenon of “government absence” and “government offside” has also occurred from time to time.In order to improve the efficiency of capital allocation,it is necessary to thoroughly study the relationship between financial development,government intervention and capital allocation efficiency.This paper focuses on the financial development,government intervention mechanism and transmission path affecting the efficiency of capital allocation;analyzes the history and current situation of China's financial development;using Wurgler's(2000)capital allocation efficiency model,using 30 provinces in China from 2010 to 2016 and The relevant data of 26 industries use the two indicators of financial development scale and financial development efficiency to measure the level of financial development.At the same time,the local fiscal expenditures after eliminating science,education,culture and health are used as indicators to measure government intervention,and a systematic GMM model is constructed for empirical testing.And the discussion is divided into regions.Finally,relevant policy recommendations are proposed based on the basic conclusions of the empirical analysis.The empirical research shows that China's capital allocation efficiency will be affected by the growth trend of capital allocation efficiency in the previous period,there is obvious path dependence.The expansion of financial development scale and the improvement of financial development efficiency can effectively promote the efficiency of capital allocation.Excessive government intervention will reduce the efficiency of capital allocation,and excessive government intervention will also inhibit the role of financial development in the efficiency of capital allocation.From a regional perspective,there are significant regional differences in China's financial development level.The overall level of financial development is successively decreasing in the eastern region,the central region,and the western region.The financial development level of different regions has different allocation efficiency of regional capital.The main performance is that the financial development in the eastern and central regions has improved the efficiency of asset allocation,but the degree of influence has gradually decreased,while in the western region,the impact of financial development on asset allocation efficiency is not significant.The impact of government intervention in different regions on capital allocation is also different.The main performance is that government intervention in the western region and central region has seriously affected the efficiency of asset allocation,but the degree of impact has gradually decreased,while in the eastern region,the impact of government intervention on asset allocation is not significant.