The Research On Financial Development And Efficiency Of Capital Allocation Of Real Economy

It has been highly concerned in the domestic and foreign academics and practitioners about the dependence and interaction between finance and the real economy, but the academic circles have not reached an agreement. For a long time, the domestic academic circles mainly analyze and do research on the relationship between financial development and economic growth based on empirical aggregate data, and lack analysis about the internal impacting mechanism in depth. At the same time the traditional theoretical viewpoint that "the level of financial development of a country depends on the level of economic growth of the country "is also too absolute, and specific time-varying evolutional process of a country's financial development still remain unclear. Besides, the 2007 global financial crisis makes the global academic circle give a profound consideration about the relationship between finance and real economy. At the special and defining period of financial development and reform, with financial globalization accelerating today, China is also faced with a series of questions:How to promote financial development and reform better? How to get better coordination between financial development and growth? How to improve the efficiency of capital allocation in real economy, making the finance to serve the real economy better?Based on the foundation of combing domestic and foreign research literature, firstly this dissertation does an intertemporal comparison on the difference across different financial patterns and parts of process towards marketization. Then the dissertation questions the viewpoint that the level of financial development depends on the level of real economic growth, learns from the economic thought of interest groups of Rajan and Zingales (2003a), Becerra, Cavallo and Scartascini (2012), and reconstructs the theoretical analytical framework, to analyze the mechanism from the perspective of the interaction between financial industry and real economic industry to find that only when trade and capital-flow are both open under the market economy, real economic industry and financial industry in the market economy will drive the financial development forward at the same time. And then this dissertation tries to compare the level of financial development of countries of different developing patterns from several dimensions, and do further comparative empirical study based on several countries' non-balanced panel data. Simultaneously, based on previous studies and previous analysis, the dissertation does further expansion of the Wurgler (2000) Classical efficiency of capital allocation model, and constructs theoretical framework to analyze how financial development affects real economy through the mechanism of capital allocation from the perspective of time and industrial level. Then we use FGLS (Feasible Generalized Least Squares) method of SUR (Seemingly Unrelated Regression), LSDV (Least Square Dummy Variables), Hausman test to do empirical study based on unbalanced panel data of China's real economy. Moreover, we do a further comparison between China and more financially-developed country based on the analysis of this mechanism. The discussion and in-depth analysis gives a better picture about the relationship and interaction between financial development and real economy, making the dissertation have more theoretical value and practical significance, while providing a good policy recommendation with a view in the special period of financial development and reform and the critical moment of structural transformation in China.Results of the dissertation show that:Firstly, although the same developing process of financial development or liberalization in different countries almost obey the same rule, different countries faced different and specific historical environment, different cultural systems and so on. So countries should make decisions about reform and macro-economy based on their specific circumstances. Secondly, in a market-based economy environment, only when trade and capital-flow are both open under the market economy, real economic industry and financial industry in the market economy will drive the financial development forward through boosting financial requirement and development at the same time. And this is certainly universal in the process of different countries'financial development and different patterns. For more financially-developed countries, the mechanism is more prominent. The level of financial development of China has greatly improved since the policy of opening and reform was carried out, and China belongs to financial development demand-led type in nature, but still remains evident gap with developed countries. Therefore, China should shift focus on the trade and capital-flow opening, especially the latter, to let the mechanism drive financial development better. Thirdly, China's financial development boosts the efficiency of capital allocation on real economy and further stimulates economic growth, but at this stage financial intermediation plays a more significant role than financial market. And the trend of efficiency of capital allocation in China is ascending, but remains evident gap from developed countries. Fourthly, the mechanism is more prominent for those industries which are higher dependent on external financing and their efficiency of capital allocation ascends obviously more than other industries, giving a phenomenon of "asymmetrically industrial effect". The phenomenon is still not evident in China while more evident in United States, showing and confirming that China has still been undeveloped in finance.The main contribution of the dissertation is as follows:Firstly, it systematically summs up the difference about financial systems among different and representative countries, and does an intertemporal comparison in some significant processes of different patterns. Then it shows that a country's development and macro-economy policy are affected by specific historical environment and cultural system,and so on. Secondly, the dissertation constructs theoretical framework to analyze the changes and differences in a country's financial development process based on the new perspective of interaction between the financial sector and real economic industries, to obtain more universal law of impetus of financial development and compare the difference through empirical study based on several countries' panel data, including countries of representative financial development patterns and emerging economies. Thirdly, the dissertation extends the model of efficiency of capital allocation, and builds a comprehensive theoretical framework to analyze how financial development affects real economy in a country, industrial effect that the heterogeneity of industries and firms bring? and difference between countries.