A Study On The Influence Of Financial Decentralization On China's Economic Growth

After more than 40 years of reform and opening up,China's economy has developed rapidly,creating a "growth miracle" in human history.Under the planned economy system,due to the excessive concentration of central government power,the optimal allocation of financial resources has not been fully played,resulting in low economic efficiency.In order to mobilize the enthusiasm of local governments to develop the economy,the central government began to decentralize some financial rights.It has proved that it is this institutional innovation that drives China's rapid economic growth,but it also makes China's economy face severe challenges.This situation is closely related to the incentive effect brought by the "financial decentralization" system.Relevant research shows that moderate financial decentralization helps to stimulate the enthusiasm of local governments to develop local economy,which is beneficial to local economic growth;however,when the level of financial decentralization exceeds a certain degree,excessive demand for financial resources by local governments can also induce financial risks and even cause financial crises.The above uncertainty about the impact of financial decentralization on economic growth shows that the two are not simply linear.Therefore,to study the non-linear relationship between financial decentralization and economic growth,to clarify the distribution of financial power between central government and local government,It is of great significance to improve the optimal allocation of financial resources so as to better play the respective information advantages of local and central governments in order to promote the high quality growth of China's economy.Based on the above-mentioned characteristic facts of economic development,this paper attempts to study the internal logic of financial decentralization driving China's economic growth.First of all,this paper expounds the application of decentralization theory in China on the basis of decentralization theory;secondly,according to the time context,this paper analyzes the historical evolution of financialdecentralization since the founding of New China,and the internal mechanism of the influence of financial decentralization on China's economic growth;thirdly,using the provincial data and panel threshold model of China to test the possible nonlinear relationship between financial decentralization and China's economic growth,and finds the optimal proportion of financial decentralization to promote China's sustained economic growth;finally,combining the previous research conclusions And the objective reality of the spatial difference of financial decentralization in every province and city of our country,this paper puts forward some suggestions on the rational and effective division of financial rights between the central government and the local government,and provides a theoretical reference for the better formulation of the policy of financial service real economy development.The conclusion of this paper can be summarized as follows :(1)Financial decentralization is to promote the sustained and healthy development of the national economy,optimize the allocation of financial resources,stimulate the enthusiasm of the participants in the financial field,and arrange a series of financial related rights and obligations within the central government and local government,the banking system,the government and the market,such as the right to approve and approve loans,the allocation and control of financial resources,financial development and management.In particular,the financial decentralization defined in this paper mainly refers to the financial decentralization at the level of central government and local government,and the financial decentralization at other subject levels is less involved.(2)According to the central government's balance of economic development and financial risk prevention and control objectives,this paper divides the evolution of China's financial decentralization since the founding of the people's Republic of China into the following four stages: first,from 1949 to 1977,with a high degree of financial centralization;second,from 1978 to 1993,with the first decentralization of the central government;third,from 1994 to 2007,with the central government regaining its power in thedistribution of financial resources;and fourth,from 2008 to the present,with the central government devolving power in financial management and gradually standardizing financial decentralization.(3)There is a nonlinear correlation between financial decentralization and economic growth,and there is a significant double threshold effect.According to the threshold,this paper further subdivides financial decentralization into low level financial decentralization,medium level financial decentralization and high level financial decentralization.It is found that both low-level financial decentralization and high-level financial decentralization have a negative impact on China's economic growth;medium-level financial decentralization has a positive effect on China's economic growth,that is,moderate financial decentralization is conducive to the sustained and healthy development of the economy.In addition,there are obvious regional differences in the impact of financial decentralization on China's economic growth:financial decentralization on the central and eastern regions Economic growth has positive promoting effect,but it has negative restraining effect on economic growth in western region.The regional difference of the effect of financial decentralization on economic growth is also part of the reason that financial decentralization has threshold effect on economic growth.(4)There is a relatively stable inverted "U" relationship between fiscal decentralization and economic growth,and the combined effect of financial and fiscal decentralization is not conducive to economic growth;the degree of trade dependence is significantly positively related to economic growth,that is,the higher the proportion of total import and export to GDP is,the more conducive to sustainable economic development;and there is a significant negative correlation between urbanization level,output dependence on loans,population growth rate and economic growth,which indicates that the promotion of urbanization level,the increase of output loan dependence and the increase of population growth rate are not conducive to economic growth at the present stage.Therefore,the central government should give appropriate financial rights to local governments,rationally guide and optimize the spatial allocation of financial resources,and strive to improve the unbalanced pattern of regional development in China.In addition,we should proceed from the objective reality of the unbalanced financial development and economic development of our provinces and cities,speed up the improvement of the level of financial development of provinces and cities,and narrow the difference of financial decentralization.We will implement a targeted regional development strategy,clarify the laws of the phased impact of financial decentralization on China's economic growth,and adopt reasonable and effective policy measures to guide the changing direction of China's economic growth;accelerate the transformation of the official assessment mechanism,avoid excessive competition among local governments,and promote governance system and governance capacity modernization.