Empirical Research On The Relationship Of Financial Development And Economic Growth In Shanxi Province

Finance is the core of modern economy. With the importance of finance in the national economic growth governments and academician pay more attention to the research of the relationship between financial development and economic growth. Western scholars have done some empirical research on this subject since 1960s. In recent years, Chinese scholars study the situation of China from different perspectives. However, these studies are basically concerned about the country or regions which are not applicable to every province. Shanxi Province, in the central region of China, whose economy falls behind of other provinces, has its own characteristics of economic growth. So, it is significant to do some research on the situation of Snanxi Province.The paper selects economic and financial data of Shanxi from 1980 to 2009 and do empirical study with VAR model. Though co-integration test, Granger causality test, impulse response and variance decomposition, it is obtained that there is a relationship between financial development and economic growth in Shanxi Province. The scale of financial development improves economic growth. On the other hand, financial efficiency is useless to economic growth. It means the quantity, not the quality of financial recourse caused the economic growth of Shanxi. Then the suggests can be relevant and object.The innovation of the paper is to use energy consumption indicators, considering the reality of Shanxi Province. And it reveals that the support path of finance to economic growth, so the suggests can be targeted and practical significant. At the same time, it also add the relevant studies at provincial levels.