The Study On Threshold Effect Between Financial Development And Economic Growth In China

As the economy developing, the finance already became the important method that the government macroscopically regulated and controlled economy, and became the important lever which the social resources been disposed, and got up the key role to the modern economy. But on the recent domestic causal relationship research, some considered that financial development promotes the economic growth,also had the viewpoint which both promoted mutually, meanwhile had not obvious causal relation. In addition,the financial development and economic growth show the multiple equalization potential . Therefore, the relationship between the financial development and economic growth is likely to be nonlinear. Based on this, this paper uses"threshold model"carries on the inspection to the nonlinear relationship between finance development and the economic growth, hopes find out"threshold effect"between financial development and economic growth, and provided the theory support and the policy suggestion for Chinese financial development and economic reformation.This paper utilizes the threshold model in the AK model, uses our country 1992-2007 year third quarter's quarter economic and financial data, has made the examination to the nonlinear relationship between finance development and the economic growth. But the result of examination is unexpected. Comparing with the some conclusion that the financial development promotes the economic growth, this paper provide the relationship between financial development and economic growth is threshold effect significantly, but apart from the stock market, whether financial development has a higher level or lower level, financial development and economic growth is negative correlation. This shows that financial development inhibit economic growth, but also shows that financial development and economic growth remains linear relationship.Because of the special nature of our switch system, on the one hand show some characteristics of financial restraint, on the other hand does not apply the financial deepening theory. Therefore, only from Chinese economic characteristics, research on the contradictions of Chinese economic and financial development, can we identify suitable for Chinese economic development path of their own theories and fruitful deepening financial reform policies.