China's Financial Liberalization Effect Decomposition: Economic Growth, Financial Risk, And Income Distribution

The causes of U.S. financial crisis, from a different point of view, we can receive different causes. But they are inseparable from the concept of financial liberalization, economic globalization and financial integration.Since the theory of financial deepening has been proposed, financial liberalization is sweeping the globe, forming a global financial system and far-reaching change phenomenon. Financial liberalization eases the financial repression, attracts a large number of foreign investment, enhances the ability of the financial institutions to finance investment projects and promotes economic growth. But the South-East Asia, Latin America and other regions or countries fall into financial crisis after the implementation of financial liberalization. Moreover, financial liberalization also has a huge impact on income distribution, especially the proposal of the shared-style development and finance, so we should pay more attention to inequalitySince the reform and opening up, economic reform carried out in constant which included the financial reforms. The theoretical basis of China's financial reform is financial deepening. Indeed, the level of China's financial liberalization is increasing. How about the effect with the improvement of the level of financial liberalization? This article will discuss this issue from the growth, risk and income distribution,The variable of financial liberalization, financial risks and income distribution are quantified . We use principal component analysis to structure the indicators of China's financial liberalization, financial risks and use gini coefficient as indicators of income distribution. We find that financial liberalization is gradual deepening since reform and opening, and especially since 2000. Financial risk is higher before and after a few years in the mid of nineties, but it is declining since the late nineties. Meanwhile, the income gap continues to widen.The empirical results show that: financial liberalization has long-term Stable equilibrium relationships with economic growth, income distribution, financial risks. Financial liberalization promotes economic growth, reduces financial risks and increases the income distribution gap. Error correction has the effect of adjusting the deviations from equilibrium, and financial liberalization produces the positive impact on economic growth and income distribution gap, but the impact on financial risk is positive at the beginning, then is negative. The most obvious effect of financial liberalization is economic growth, next is financial risk, income distribution effect is minimal.Since reform and opening, growth, risk and inequality coexist with the reform of financial liberalization. In the process of reform, we should learn from foreign experience and lessons, "learn skills to self-reliance", combine with China's reality to grasp the growth path of financial liberalization, control risk timely, reduce the income gap, constantly improve our level and quality of the financial industry...