Financial Development And Economic Growth

The cause, the inherent mechanism and the approach of the economic growth is always being core problem in the theory studies of economic. More and more economists conduct the research in the theory and the practice as well as the relationship between financial development and economic growth. The theory research and the causal relation of financial development and economic growth, as well as contribution degree that the finance develops to the economic growth and the inherent effect mechanism between the both, have important practical or immediate significance to Chinese economy.Since 1978's reform and opening, China's fast economic development has attracted the world's attention. At the same time, China's financial development has also come in to the new era. Therefore, it is necessary to study the actuality of China's financial structure and financial development system, analyze China's financial and the relationship between financial development and economic growth.The main purpose of this paper is to make use of the Granger causality test to study the causal relationship between economic growth and financial development, to judge our country is "demand-following" or "supply-leading". Theoretically, to analysis the inherent effect mechanism between economic grow and financial development, to choose the appropriate finance index which is affecting economic growth to build the model, to analyze demonstrably the contribution degree that our finance develops to economic growth, thereby, to submit policy suggestions.The result of empirical analysis indicates that the development of financial agency, stock market, monetary market promote economic growth in the long term. In the foundation of the result, this article submits corresponding policy suggestions, including enlarging the finance support to science and technology, expanding the financial service to the not-state owned and perfecting the capital market.