Research On The Impact Of Financial Structure And Financial Service Level On Economic Growth

Improving the financial structure is not only critical to the establishment of modern financial systems,but also is a key measure to promote the transformation and upgrading of the real economy.academic circles usually use the proportion of direct financing as an important criterion of measuring financial structure.However,would increasing the proportion of direct financing ensure that the real economy can gain more benefits from the financial structure,and get promoted? It is noted that with the improvement of financial service level,negative impacts on the economic growth might have emerged as the economy showcases over-financialization development and a mismatch existing between financial service level and economic growth.In this case,it is worthwhile to analyze the role of financial service level in the mechanism that financial structure has an impact on economic growth.Accordingly,this paper selects the unbalanced panel data of 55 countries or regions from 1994 to 2016 as well as the time series data of China from the first quarter of 1993 to the fourth quarter of 2018 for empirical test.First of all,the multinational panel data is applied for basic analysis,manifesting that financial structure has remarkable positive effects on economic growth,and meanwhile,it could boost the improvement of financial services.The improving financial services,on the contrary,has a restraining effect on economic growth.In other words,the level of financial services plays as a mediator in the impact of financial structure on economic growth.Based on the result,this paper applies analyzing methods from diverse aspects,mainly including time-varying analysis of single economy and variance analysis of multi-economy.The time-varying analysis of single economy uses China's quarterly time series data and TVP-SV-VAR model.This method has achieved a similar result,namely that if a unit of positive impulse response was given to financial structure,the level of financial services would correspondingly rise.As the positive impulse response to financial structure can promotes economic growth,the positive response of financial service level,on the contrary,has a negative impact on economic growth.In terms of the variance analysis of multi-economy,multinational panel data and dynamic panel quantile regression model have been applied,proving that even the impact of financial service level has been taken into consideration,as economy continues to grow,financial structure could still promote economic growth,and financial service level could still restrain the growth.In addition,the marginal effect of financial structure on economic growth evolves dynamically with the ongoing economic development,showing a characteristic similar to an inverted U font.With the rising tendency of the economic development,the marginal effect of financial structure on economic growth at first would rise briefly to its maximum,and then decline gradually,but its value would remain positive all the time.Meanwhile,the marginal effect of financial structure in middle-income countries would be significantly higher than that in high-income countries.Based on the analysis results,this paper puts forward three pieces of policy suggestions.First,financial structure should be actively adjusted,no matter the country is a high-income nation or a middle-income nation,so as to promote economic growth and prevent negative impacts of economic over-financialization brought about by over-developed financial services.Second,policymakers should moderately maintain the financial deepening and improve the financial supervision system,to prevent funds from being distracted from the intended purposes,promote the investment to departments of the real economy with high productivity,and optimize the effective supply level of financial services,so that financial services could match the development of real economy.Third,whatever period the economy of a country or region now stands,its financial structure should in time be adjusted to maximize its positive impacts on economic growth.The late-mover advantages of financial restructuring should be made full use of,especially for middle-income countries.