Regional Financial Development And Regional Economic Growth, The Relationship Between Empirical Research

Nowadays, more and more economists, including the Chinese researchers, pay attention to the research on finance development and economic growth. With the pace of Chinese reform and economic growth, the gap between regions, especially the east region and the west region, is broadening quickly. Could the finance differences between regions explain the economic differences between regions during the transformation of China? Could the finance development be the reason of the growth of Chinese economics? The article can provide empirical evidence on the regional aspect.The article uses the Pagano(1993) model of endogenous growth. With the economic and finance data of east, middle and west region, we establish an appropriate model in order to contact the regional economic growth with the regional finance development. Then we use the econometric method to test the relations between them. But the result of test is unexpected. Comparing with the overwhelming conclusion that the differences of regional finance can explain the differences of regional economics, we provide some evidence on the opposite correlation of finance development and economic growth on the east region. Then we deduce three "paradox" on the regional finance development and regional economic growth.The article explains the reasons of the three "paradox" with the special transformation system of China. The conclusion is that the Chinese finance system is still an exogenous variable of economic system. Under the special system, the more finance resources invested, the more resources collocated inefficiently. The result is that the speed of economic growth has been slower. At last, the article suggests the government find a suitable way of Chinese finance deepening with the character of Chinese special economic system.