A Study On Effect Of Aggregate Financing To The Real Economy On Economic Growth In China

With the reform of the financial system and financial marketization in China, the financial structure of China has changed greatly. In recent years, China’s new financial institutions continue to emerge, the financial market diversification, financial products and financing tools continue to innovate. As the main channel of financing, the effect of the bank is gradually declining, the proportion of direct financing in aggregate financing to the real economy continues to rise, and other financial institutions play a more and more important role in financing. Subsequently, China is facing a great challenge to the monetary policy adjustment for using the generalized money M2 and the new added RMB loans yearly as the intermediate target. The aggregate financing to the real economy is presented innovatively by the People’s Bank of China as an important indicator that measures the real economy obtaining the total amount of funds from the financial system. The indicator appears in official documents recently, comprehensive study is relatively less. The indicator’s data is published that providing the data support for the research of aggregate financing to the real economy.The innovations of this paper lie in: the first, based on Marx’s currency circulation theory, analyzing the aggregate financing supply and demand to the real economy, proposing the conduction process of aggregate financing to the real economy, which including six steps, then revealing the mechanism of aggregate financing to the real economy. The second, based on Marx’s theory that credit is productive force, proving the aggregate financing to the real economy is also productive force, which promoting trade, investment and consumption, enlarging the scale of production. The third, trying to establish quantitative models of aggregate financing supply and demand, and then establishing the quantitative relationship among the economic growth and related variables under the equilibrium condition of aggregate financing to the real economy, based on which to analyze causes of unequilibrium.The paper is expounded with the thoughts of ―putting forward-analyzing-solving the problems‖.Putting forward questions: after teasing the domestic and foreign relevant theories and literatures, this paper puts forward the theme of research is that the effect of aggregate financing funds to the real economy in the process of economic growth.Analysis the problems: firstly, according to the different participants, markets and areas, the funds flow process can be divided into two parts of the aggregate financing supply and aggregate financing demand. Secondly, the analysis of aggregate financing supply to the real economy mainly analyzes basic principles, subjects, channels of financing supply and factors that affect the financing supply, and then carries on empirical analysis by building a mathematical model of financing supply. The analysis of aggregate financing demand for the real economy mainly analyzes basic principles, subjects and modes of financing demand, and then carries on empirical analysis by building a mathematical model of financing demand. Thirdly, based on the analysis of aggregate financing supply and demand, this paper makes the equilibrium analysis of aggregate financing to the real economy and theoretical analysis on effect of aggregate financing to the real economy on economic growth. Theoretical analysis shows that the aggregate financing to the real economy is productive force, which has a promoting effect on economic growth. Each constituent of aggregate financing to the real economy can directly and indirectly promote economic growth. Lastly, through empirical analysis, this paper analyzes the effect of aggregate financing to the real economy on economic growth. The conclusion shows that the increase of aggregate financing to real economy in a short time would eventually enable economic growth level to improve stably in long-term. This paper analyzes the reasons that causing financing unequilibrium in recent years in China by making quantitative analysis of the economic growth under the financing equilibrium condition.Through the analysis, the paper shows that there are following problems in the process of aggregate financing to the real economy promoting economic growth in China. First of all, the analysis of the aggregate financing supply and aggregate financing demand shows that the supply and demand are very sensitive to the change of interest rate. Through the quantitative analysis of the economic growth under the financing equilibrium condition, it can be found that as the price of the fund, the interest rate does not have enough pricing power in the process of financing, leading to the unequilibrium of aggregate financing supply and demand to a certain extent. Secondly, the analysis of financing supply and financing equilibrium shows that the development of capital market is slow and the direct financing is insufficient in China. Again, from the analysis on effect of aggregate financing to the real economy on economic growth, it can be seen that the aggregate financing to the real economy has a promoting effect on economic growth. But from the financing statistics scope, it can be seen that the statistical index exists gaps, which will reduce the effect of monetary policy implemented by monetary authorities and the role of promoting economic growth will be greatly reduced. Then the analysis of aggregate financing demand, financing equilibrium and quantitative analysis of the economic growth under the financing equilibrium condition show that there are financing difficulties in the real economy in China, the support role of aggregate financing to the real economy has not been fully played. Finally, from quantitative analysis of the economic growth under the financing equilibrium condition, it can seen that the monetary policy can not effectively regulation financing unequilibrium all the time, which indicates that the need to further improve controllability of the aggregate financing to the real economy. In addition, financial statistics information gap also indicates that there may be some loopholes in financial regulation.Solving the problems: base on above analysis, this paper gives the practical policy suggestions about improving the level of monitoring aggregate financing to the real economy, promoting quickly growth of direct financing, strengthening financial support for the real economy and improving the level of financial supervision.