The Research On The Financial Leverage's Influence On Regional Economic Growth And Financial Stability:Based On Panel Data Of 10 Cities In Zhejiang Province

Since the global financial crisis broke up in 2008,the potential risk which is raised by high leverage has attracted the attention of the government,financial market and people all over the world.With the implementing of Supply-side structural reform in China,series of jobs such as addressing overcapacity,reducing inventory,deleveraging,lowering costs and bolstering areas of weakness are implemented in overcapacity areas,state-owned enterprises and government.Meanwhile,the financial leverage figures show a rising trend which draws serious concern of society.Therefore,the deleveraging jobs carries over to financial sectors based on the risk preventing policy.For one side,an exceeded level of financial leverage may bring much negative effects,such as the over-expansion of credit,the credit risk,etc.and may do harm to financial stability.For other side,the negative effects on liquidity risk and market fluctuation which are caused by inappropriate process of deleveraging also cannot be ignored.Zhejiang province is a region with large scale of economy and continuously perfecting of financial facilities,and cities in Zhejiang are with different characteristics.And it is meaningful to study the financial leverage and its influence on the economic growth and maintain financial stability based on the cities in Zhejiang province,and give advices to elevate the management standard of financial leverage.The study is divided to five parts.Firstly,introducing the background and significance of the study,summarizing the literatures which are studied by foreign and domestic scholars,and introducing the contents and methods of the research.Then in Part Two,inducing the concepts and theories of financial leverage,financial stability system and economic growth.Thirdly,talking about the economic running condition in Zhejiang Province.Studying the leverage ratio,the economic growth and financial stability condition of its 10 cities in Year 2007-1016 in the background of the global financial crisis.And in Part Four,based on panel data of 10 cities in Zhejiang province over the year of 2007-2016,the paper constructs an index of regional financial stability and uses panel data model to analyze the effects of financial leverage volatility on regional economic growth and financial stability to find a proper range of financial leverage.And the study finds that the growth of financial leverage will first do benefit to regional economic growth and financial stability,but after an inflection point,has a negative effect.And at last,giving advices after the research.The results support the advices that the regulators shall strengthen the macro prudential management,and do the deleveraging jobs base on the reality of various regions and proceed in an orderly way and step by step,so that to boost the economic growth and maintain financial stability.