Research On The Relationship Between Financial Development And Economic Growth In Underdeveloped Regions

In the process of resource allocation,the financial industry plays the functions of transaction settlement,capital accumulation and capital allocation,which has a significant impact on economic growth.At the same time,the improvement of economic growth level will lead to the demand for financial services,and then promote the financial development.Yunnan Province,as one of the underdeveloped provinces in Southwest China,has been strengthening the scale and quality of economic growth and innovating financial development in recent years.However,there is imbalance between financial development and economic growth in 16 cities,and there are great differences between financial development and economic growth.The study of the relationship between financial development and economic growth from the perspective of 16 cities in Yunnan Province plays an important guiding role in alleviating the imbalance between regional financial development and economic growth.Firstly,the author combs the present situation of economic growth and financial development of Yunnan Province from the whole of Yunnan Province,the four major regions of Yunnan Province and the 16 cities of Yunnan Province.Then using the panel data of 16 cities in Yunnan Province from 2000 to 2015,using the panel vector autoregressive model,through Granger causality test,Impulse response analysis and variance decomposition analysis are used to analyze the relationship between financial development and economic growth in Yunnan Province.It is found that the financial development and economic growth of Yunnan Province are causality,and the former has a restraining effect on the latter,and the efficiency of financial development has a long-term impact on the financial development and the quality of economic growth.There are obvious differences in the relationship between financial development and economic growth in various regions of Yunnan Province.Therefore,taking Yunnan Province as an example,the author puts forward some specific policy suggestions for promoting benign interaction between financial development and economic growth in underdeveloped areas: standardizing the financial market,reversing the restraining effect,promoting the benign interaction between finance and economy,and improving the efficiency of financial development.Promoting the quality of Financial Service for small and Medium-sized Enterprises;implementing differentiated Financial policies and improving the pertinence of the policies.