A Study Of Internal Relationship Between Financial Structure And Economic Growth

The problem of financial structure and economic growth is one of the important research areas to insight economic operation rules. Many papers made a detailed analysis on the financial structure of economic growth, and focused on the search for an ideal financial system, in which what should be included in financial products, as well as what ratio needed to maintain between different products in order to better allocation of economic resources, and thereby achieving economic growth purposes. In this view, this paper considers that the relationship between financial structure and economic growth should be a two-way role, not only a positive effect on financial structure to economic growth, but also including the reverse relationship on economic growth to financial structure. Based on the theoretical analysis and practical study of financial structure, this paper will try to study the relationship of financial structure and economic growth in Zhejiang province with relevant economic data. Firstly this paper briefly reviews the relevant theory of financial structure and economic growth, and outlines the analysis ideas through the relevant theory; Next, threading on the above analysis, the third chapter deeply discusses the internal relationship between financial structure and economic growth, which analyzes with two paths, the one is the mechanism of financial structure on economic growth, the other one is the mechanism of economic growth on financial structure, and shows that dynamic loop relationship between them does exist. According to economic data in Zhejiang, chapter four comprehensively analyzes the financial structure of the overall size and internal composition. Then after measuring the differences on financial structure of cities in Zhejiang province, this chapter sums up a model of financial structure with Zhejiang characteristics, namely, non-formal finance in the whole financial structure occupies an important role, and the proportion continues to increase with the deepen economic growth. Based on the facts that describes in the three and four chapters, chapter five carries our empirical studies on the relationship between Zhejiang Financial Structure and economic growth. This chapter firstly uses principal component to simplify many financial structure indicators into two integrated factors, namely total finance factor and financial efficiency factor; then using these two factors builds five econometric models, which show that the total financial factor has a reverse effect on economic growth, and financial efficiency factor has catalytic effect on economic growth, but economic growth has catalytic effect on both financial factors; Finally it establishes a fixed effect variable intercept model to check financial structure differences with panel data of 11 cities in Zhejiang. Based on the analysis of the previous chapters, this final chapter gives the proposals of Zhejiang financial structure in order to promote economic growth, as well as the prospects to the shortcomings existing in this paper.Different from other researches of financial structure and economic growth, this paper studies the relationship in Zhejiang province where has such a dynamic, multi-dimensional, and well-developed private economy; At the same time, considering the availability and feasibility of Zhejiang financial data, this paper introduces principal component to simplify indicators, which tries to make this research more practical significance. There are some certain differences between analysis paradigm of mainstream economics and this kind of approaches, but it can also drawn some useful conclusions and has some significance in broadening the study relationship of financial structure and economic growth.