Empirical Research On The Relationship Between Scale,Efficiency Of Financial Development And Economic Growth

Over the past decade,China's economic growth has made great achievements.The economy has maintained steady operation,successfully weathered the 2008 financial crisis,economic development entered the new normal.Economic growth is the foundation of social development in a country or region.Finance is the core of economic capital allocation.Finance plays an increasingly important role in economic growth,the expansion about scale of financial development can provide abundant funds for economic growth,and the improvement about efficiency of financial development can step up the allocation speed of funds.Most domestic scholars focused on either one region or all regions of China in their studies,and there are few specific comparative studies on the two regions.The eastern and central China are adjacent regions,there is a big gap of financial development and economic growth between them,so it is of great significance to study the relationship of financial development and economic growth between eastern and central China,which not only enriches the regional financial development and economic growth theory,but also offers a new research perspective for regional balanced development.This paper reviews the literature and theories about financial development and economic growth,and puts forward the corresponding hypothesis: financial development can drive economic growth;the degree that financial development promotes economic growth varies among regions.To test these hypothesis,this paper takes 11 years'(2007-2017)provincial panel data as samples,based on the Cobb-Douglas production function,joins the control variables related to the economic growth,sets up static panel model,respectively study the relationship of scale,efficiency of financial development and economic growth in eastern and central China,then contrasts and analyzes the results.The empirical results of this paper verify the previous hypothesis.First,the scale and efficiency of financial development in the eastern and central China both play a positive role in promoting economic growth.The contribution efficiency of financial development to economic growth exceeds the scale of financial development,we should pay more attention to financial development quality rather than quantity;Secondly,because of the gap about economic and financial development between regions,the efficiency of financial development in the eastern China contribute more to economic growth than that in the central China,but the scale of financial development in the central China contribute more to economic growth than that in the eastern China,which reflects the degree of financial development promotes economic growth varies among regions.According to the results of empirical regression,this paper puts forward some targeted suggestions: focus on expanding the scale of financial development,improves the efficiency of financial development,intensifies the financial supervision,prevents and resolves potential financial risks,and coordinates regional financial development.