Research On The Influence Of Financial Development And Economic Growth In China

The function of financial financing and risk dispersion perfectly meets the needs of modern market economy for social division of labor and large-scale production,and plays an important role in the economic system.The flow and accumulation of financial capital has an important impact on the operation of the financial system.Since Schumpeter affirmed the positive significance of financial development to economic growth for the first time in 1912,academic circles have had a heated discussion around this.Both theoretical and empirical studies show that financial development has a positive role in promoting economic growth,and the low level of financial development will lead to the situation of "financial repression",which requires "financial deepening" reform,so that finance can better serve the economy,We will promote economic growth and raise the living standards of our people.With the continuous enrichment of financial development theory,the financial industry also began to expand wantonly.After the U.S.financial crisis that affected the world in 2008,people began to reflect on the negative impact of the wanton development of the financial industry,and found that if the financial capital could not be effectively managed,it would seriously damage the economy.Since China's reform and opening up,the financial industry has been developed in an all-round way,and its role in promoting economic growth has become increasingly obvious.However,with the economy entering the new normal and the economic system entering the transition period,many problems have been exposed in China's financial system.For example,the resource allocation is distorted,the financial industry has a huge asset scale,but it is difficult to meet the financing needs of many small and medium-sized micro enterprises.The financing of enterprises is difficult and high cost,so they can only resort to shadow banks.The shadow banks increase,which is difficult to supervise and endanger financial stability.The capital return rate of the financial industry is higher than that of non-financial enterprises for a long time,because of the nature of capital's interest,the financial capital is too much in the financial industry Ministry circulation,seeking short-term high-yield,failed to realize the original intention of serving the real economy,hindering the development of the real economy.In the modern market economy system,finance no longer promotes the economic growth as one-way as before,the relationship between them has changed,and financial capital plays an important role in it.Therefore,it is of great significance to study the operation law of financial assets in the modern market economy and how they affect the financial and real industries and then the economic growth.There are few existing studies on the impact of capital in financial and real industries on economic growth from the perspective of capital profitability.This paper tries to find a balanced income range between financial and non-financial industries,improve the relationship between them,and make financial assets This is more spontaneous,better service to the service and real industry,and help the real industry realize the healthy long-term growth of China's economy.This paper reviews the literature on the relationship between financial development and economic growth in recent years.It is found that most of the literatures believe that financial development is beneficial to economic growth.However,with the improvement of financial development level,scholars' understanding of the relationship between financial development and economic growth has changed.Scholars begin to question the role of financial development in economic growth.A large number of research results show that financial development has a restraining effect on economic growth,or there is no obvious relationship between them.It can be seen that the relationship between financial development and economic growth is not a simple linear one,but a nonlinear one.The second chapter explains the theoretical basis,through the expansion equation,based on the perspective of capital return rate,theoretically analyzes how the difference between the capital return rate of the financial sector and the real sector affects the development of the real economy,and then affects the economic growth.In order to better study the situation of our country,this paper shows the trend of the return on capital of our financial industry since the financial reform and opening up,and compares it with non-financial enterprises.Then,by expanding the first law of piccady,from the perspective of the composition of financial capital and real capital,we find out the reasons for the change of the relative return on capital between financial industry and non-financial industry.In Chapter 5,by collecting the data of 31 provinces in China from 2003 to 2017,a static panel model is established.According to the theory of endogenous economic growth,we can see that there is always endogeneity in the economic model.Therefore,the System GMM dynamic panel model is adopted to solve the endogeneity problem,and further regression estimation is carried out.A more accurate conclusion is drawn: the relative capital receipts of China's financial industry and non-financial industry The benefit rate has a non-linear relationship of inverted "U" to economic growth.And through the regional regression,the stability of the model is verified,and it is found that in different economic development regions,the inflection point of inverted "U" is different,let alone the relationship between finance and economic growth will change in different stages of financial development.At the end,according to the empirical conclusion,this paper puts forward relevant policy recommendations,hoping that the government will actively introduce policies to change the development mode of over dependence on investment;develop direct financing market to help enterprises better financing;hope that through the cultivation of rational long-term investors,funds can better help enterprises to long-term research and development,use innovation instead of investment to drive economic growth;build more The multi-level banking system strengthens the competition of the banking market,and gradually changes from the marketization of the bank to the marketization of the factor price,which makes the return rate of the capital factor among various industries tend to be equal,improves the relationship between the financial industry and the non-financial industry,and enables the long-term and balanced growth of China's economy.