| Ronald I·Mckinnon and Edward S·Shaw created the theory of financial deepening in 1973.they have been impacted by Liberal ideology and they advanced the proposition of financial liberalization for the developing countries in their literature. For the economics which financial is constrained ,Ronald I.Mckinnon and Esward S·Shaw proposed that developing countries should abrogate the policy of financial recommendations , relax the interest rate control, control the inflation and make the interest rate can reflect the demand of funds. When real interest rate is positive , financial system can gather more financial resources and achieve financial deepening.There is a relationship between the level of financial deepening and economic growth. Ronald I·Mckinnon amended the H-M model of new classical integrated faction, and discussed the importance of financial deepening to economic growth .Financial development impacts economic growth and also is impacted by it. There is a mutual relationship.In the theory of financial development and empirical research , the financial capital stock is usually used to denote the size of financial intermediaries and the level of financial development. Goldsmith advanced the financial interrelation ratio (FIR) to measure the situation of financial deepening and financial development in 1969.Because it is not easy to calculate the quantity of financial activities and economic activities, researchers take a simple calculation: a ratio of total financial assets and GDP ,FIR=total financial assets/GDP. And it is simplified to be M2/GDP by Ronald I·Mckinnon. This ratio has a broad application.Through the empirical of those indexes ,we discovered that the ratios of financial assets /GDP and M2/GDP can not reflect the level of financial deepening for our country. In our country, FIR has increased over 160% for seven years from 1996 to 2003 from 90% to 162%.Compared to USA our level has exceeded USA`level. From 1993 to 1999 our country`s ratio of M2/GDP... |
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