Study On China’s Capital Allocation Efficiency And Its Influencing Factors

Capital is not only an important source and motive power of expanded reproduction but also an indispensable factor in the process of economic growth. The improvement of capital allocation efficiency is more important than the increase of capital quantity. Therefore, in order to improve the efficiency of capital allocation, perfect the financial markrt function and ptomote economic growth, it is impotrant to study the integrity level of capital allocation efficiency of China, research the industrial and local difference of capital allocation efficiency of China, explore the relationship between the financial development and capital allocation efficiency of China and analysis the influence of reconstruction to the efficiency of capital allocation from the microcosmic aspects.Based on Jeffrey Wurgler (2000) model, the dissertation utilizes econometric methods to measure and study the integrity level and the industrial and local difference of capital allocation efficiency of China. Furthermore, the dissertation explores the influence of financial development and reconstruction to the efficiency of capital allocation. Ultimate goal is to provide valuable information for firms’investment decisions and the government work. The main research works develop on the way as followed.1. After defining the capital allocation efficiency, the dissertation states the importance of researching the capital allocation efficiency introduces the content and method. At the same time ,the dissertation states the relevant theories of financial development and capital allocation efficiency.2. Based on Jeffrey Wurgler(2000) model, the dissertation structures static model、dynamic model and Panel Data model to investigate the integrity level of capital allocation efficiency of China. The results revealed that the average level of capital allocation efficiency of China is very low and the volatility of each year’s capital allocation efficiency is very big.3. Using China’s panel data of 30 provinces, the dissertation revealed the existence of local difference of capital allocation efficiency. By adding dummy variable in panel data model, it further analyzed empirically the factors which ensure the capital allocation efficiency in several aspects, including the level of local government involvement in economy, the openness of region, the level of denationalization and financial development and the population quality.4. Using China’s panel data of 36 industries, the dissertation revealed the existence of industry difference of capital allocation efficiency. By using threshold regression model, it further measured empirically the threshold levels which ensure the capital allocation efficiency in several aspects, including the level of industrial output, the technical character, the openness of industry, and the industrial structure.5. The dissertation combines Jeffrey Wurgler(2000) model with Klaus Gugler(2002) assets and profit predict model, and structures a new model to examine the influence of reconstructions of listed company to the efficiency of capital allocation. The results show that, reconstructions of listed company have obvious short-term behavior characteristics, and in the long run, reconstructions have not significant influence on the improvement of capital allocation efficiency.6. Based on Jeffrey Wurgler(2000) model and other relevant model, the dissertation investigates the influence of financial development to the efficiency of capital allocation. The results show that, China financial development has definitely negative effects on the improvement of capital allocation efficiency.7. Based on Jeffrey Wurgler(2000) model and other relevant model, the dissertation investigates the marketization to the efficiency of capital allocation. The results show that, marketization has definitely positive effects on the improvement of capital allocation efficiency.