The Construction Of System Dynamics Model Of Financial Efficiency From The Perspective Of Capital Running

Finance is an extension of the real economy. Based on real economic activities, it plays a central role in the allocation of resources. The key of finance is an exchange of value or income across time and space through the capitalization. When the capital is sensitive to the incremental value in different investment areas, it will make a goal of maximizing profits and need the financial system to meet their changing needs. Thus the extent of meeting needs determines the effect of capital on the economy. When financial needs change the existing financial structure, the role financial body plays and the financial system, then the financial efficiency seems to have been promoted. Running mechanism of capital is the internal power of financial development. At present, the question arises from the situation that finance has made over-development in quantity, yet lacks of development in quality. Therefore, it meets needs of global financial environment and financial deepening and improvement the role of financial market that to conduct a research on financial efficiency based on capital running.The paper makes a qualitative description against the structure and functions of financial system by connecting financial running among various departments and thus tries to find situation of financial system and how capital allocation adapts to the economy under economic running nowadays. The paper conducts dynamic analysis of financial system using system dynamics, makes relationship between internal and external factors clear, sets various control factors against the system, and observes behaviors and development of the system while the input control variable changes, to achieve policy simulations. The system dynamics model can be built to serve further research, acting as a "policy laboratory".The core of this paper is to apply the system dynamics method to evaluation of financial efficiency. The first part summarizes related theories of capital running and financial efficiency, and defines the meaning. The second part describes basic principles and features of system dynamics, and analyses the system dynamics model's applicability to this research. The third part builds a system framework of capital running against financial efficiency, defines the system boundary, analyses the system structure, and furthermore makes a casual loop diagram of system dynamics, and then analyses the feedback relationship in it. The fourth part conducts a flow chart of system dynamics with the ideas and method of system dynamics. The fifth part does a simulation against the model above with the VensimPLE software and analyses simulation results. And it is concluded that financial system has an impact on economic development by capital formation and agglomeration; otherwise, capital allocation, speed and efficiency of transformation and value-added needs to be improved. Thus, suggestions are put forward to promote financial services. The main innovations are: (1) Application of system dynamics modeling approach to the evaluation of financial efficiency and construction of the casual loop diagram and system dynamics model of capital running. (2) Simulation experiment of the model using the system dynamics software Vensim based on real data, and suggestions to optimize the financial system combining the empirical analysis.