Research On The Impact Of Financial Structure On The Economic Volatility

Growth and volatility are two equally important themes in the macroeconomy.For a long period of time,research on finance and economics has focused primarily on the relationship between finance and growth.In contrast,the relationship between finance and volatility is less concerned.Until Bernanke put forward the "financial accelerator" theory,which bring the financial friction into the analysis of economic fluctuations,scholors began to pay attention to the impact of financial fluctuations on volatility.But they just focused on the impact of the financial development,but did not notice the structural factors.This dissertation chose financing structure as the starting point of the research,and made a more comprehensive study on how financial structure affects economic fluctuation.The specific work was carried out from the theoretical analysis and the empirical analysis respectively:First of all,on the basis of the previous theoretical research,we analyzed the mechanism through which how financial structure influences economic fluctuation and constructd the mathematical model.According to the "financial accelerator" theory,the imporvement of financial development can curb economic fluctuations.If financing methods can be replaced each other,when the bank tightens credit,the firm can still get financing from the financial market;the reduction in the total credit does not have a substantial impact on business investment and output.Therefore,the financial structure will not affect the fluctuations.But when direct financing can not completely replace indirect financing,those who are subject to "securities constrain" have to rely on bank loans.External shocks can have an impace on the volatility through bank intermediaries.Therefore,the impact of the growth of financial development on the volatility of the final depends on the strength of the two opposite effects.The greater the proportion of bank intermediary financing in the total amount of financing,the more companies that rely on bank loans,the greater the impact of external shocks on volatility.In this case,increasing the proportion of direct financing is conducive to reducing the scope of the impact of bank intermediary channels,thereby stabilizing economic fluctuations.So,we conclude that the growth of financial growth is not necessarily mitigated when information is asymmetric;market-oriented financial structures are conducive to easing economic fluctuations.Secondly,on the basis of theoretical analysis,we use transnational panel data to examine the relationship between financial structure and economic fluctuation from different angles.First,we use the data to test our theoretical analysis.The regression results show that:(1)the impact of financial development on economic fluctuation is ambiguous,and it is possible to enlarge or suppress the volatility;(2)whether or not to control the scale of financial development,the proportion of direct financing is conducive to stabilize the volatility.This supports our theoretical analysis.Second,we use panel binary model to explore and the relationship between the financial development,financial structure and the probabilities of recession.The results show that the market-oriented financial structure can significantly reduce the chances of the recession,and the effect of financial development on the economic recession is still ambiguous.Finally,we use threshold model to explore if these is a possible non-linear relationship between the financial structure and economic fluctuation.The results show that there is a significant negative correlation between financial structure and economic fluctuation when economic development is at a low level.However,when the economy is more developed,there is a significant positive correlation between the two,showing a significant non-linear relationship between the two.Then,we turn back to China.After nearly three decades of development,China's capital market has imporved a great deal.But on the whole,China's financial system is still the absolute bank-oriented;most companies have to rely on bank loans.So,how does China's financial structure affect economic fluctuations? We use the provincial panel data to carry out empirical study;the regression results show that with the increase in the proportion of direct financing,biased market-oriented financial structure will help ease the economic fluctuations in China.Finally,based on the actual situation of our country,on the basis of the research conclusion,we put forward some policy suggestion.