Study On The Financial Development And Policy Suggestions Of The Western Region In China

Because of great differences between the eastern and the western region, the development of regional economy in our country is non-balanced. Today, with the implementation of strategy about the development of the western region, it is significant to do some researches on how to improve the western economy. Finance not only plays an important role in modern economy, but also great affects the economic growth. The more advanced financial development can give rise to the faster economic growth. So, it is necessary to analyze the western economic growth from the angle of finance. Financial development of the western region has something to do with regional economic growth, and this idea covers the full paper. Basing on the financial development theory, the author studies the characteristics of the finance of the western region, analyzes the cause why it falls behind the eastern by means of making careful comparisons between them. Finally, he draws some conclusions and makes some suggestions about how to boost the financial development of the western region. The paper is divided into 4 parts that can be summarized as follows: Part1, studies the relationship between regional financial development and regional economic growth. First, capital is vital factor for economic growth. But some economist only emphasized physical capital, human capital, ignored the financial capital. However, financial economists have different views, they think financial development is an important factor for economic growth too. Second, there are two inverse ways between economy and finance: demand following and supply leading financial development. The latter is suitable for poor country. Finally, according to the regional economy, the regional finance also can cause regional economic growth by following means: raising capital; adjusting industrial structure; leading the transfer of other factors; reforming the structure of corporation governance and so on. Thus, we can conclude that great importance should be attached to the financial development of the western region.Part2. analyzes the conditions of the finance of the western region. Basing on the some collected data, comparing the western with eastern region in following aspects: financial institution and financial instrument; indirect financial market; capital market; financial market mechanism; financial efficiency and so on, it is clear that the finance of the western region falls behind the eastern. So, it can't fully contribute to the western economic growth.Part3. probes into the reasons why the finance of the western region lags. The causes lie in two aspects. On one hand, economy determines finance, therefore, unbalanced developed strategy; market level and industrial structure directly affect the regional economy, and further limit the regional financial development. On the other hand, in the angle of finance, planning financial characteristic; united currency policy and different financial policy restrain the financial development of the western region too.Part4. puts forward some suggestions about how to develop the finance of the western region. At first, it points out that the west should choose supply leading financial development path. Subsequently, the author explores the suggestions of the financial development of the western region from six aspects: (1)making the better bases of finance on economy, mechanism and policy aspects; (2)strengthening the function of policy finance in western region; (3)realizing the diversification of commercial finance;(4)reforming the rural credit cooperatives in western region; (5) developing the western capital market; (6) strengthening financial regulation, improving its efficiency.The paper also takes into further considerations about the choose of the supply leading financial development path, the role of the policy finance, the non-governmental finance during the early stage of development of the western region and draws some new conclusions.