Theory Of Financial Development And China’s Financial System Reform Practice

With the establishment and development of the market economy system, the role of finance in economic development is increasingly important. Especially after the financial crisis broke out in2008, many scholars began to study the relationship between financial development and economic development. Financial development theory is the study of the role of financial development and economic growth and financial systems in economic development, how to build an efficient financial system and financial policies in order to maximize the promotion of economic growth and how rational use of financial resources to achieve the sustainable development of the financial and ultimately achieve sustainable economic development.After development, the theory of financial development, after the financial repression, financial constraints, financial deepening, financial liberalization process. Financial repression, the central bank or monetary authorities in the various financial institutions in accordance with the laws and monetary policy, market access, market, business processes and market exit to the implementation of strict management and strict control of various financial institutions to set up and operating funds through administrative means, the way, the direction, structure and spatial layout. Financial deepening the theory of criticism of developing countries to implement policies of financial repression such as control of interest rates and credit loans, strongly advocates the implementation of financial deepening strategy to remove or relax some of the unnecessary controls in order to achieve financial liberalization goal:the interest rate market,so that it can truly reflect the changes in supply and demand of funds in the market; the flow of funds and changes in supply and demand in financial markets, the main business of diversification of production is determined by the market mechanism, thereby increasing the total supply level of the social savings, capital raising and liquiditymore convenient, the rational allocation of capital issues are effectively addressed, improve the investment returns on this basis, and promote economic development, to achieve the purpose of opening up financial markets. Financial constraints refers to the government through the implementation of a series of financial policies in the private sector to create rental opportunities to reach both to prevent hazards but also to encourage banks to take the initiative to avoid the risk of the financial repression purpose. Chinese scholars put forward the financial theory of sustainable development is a new concept of financial efficiency, financial development and economic development of the degree of adaptation and asset finance of not to sacrifice the present and future production and service at the expense of financial efficiencyevaluation criteria. And this efficiency concept is not only stressed the continuity in time, the efficiency of resource allocation in sustainable development, not just focus on the efficiency of resource allocation in a given time of a country, but pay attention to all countries around the world in a relatively long historical period, the financial and economic interaction, the interaction of the coordination of sustainable development and this efficiency concept more attention to the embalance of space, coordinate a wider range of efficiency of resource allocation.Our country has been carried out the reform before the reform and opening, but they are conducted within the institutional framework of the traditional planned economy in China. With the establishment and development of China’s new socialist economic system, the role of financial system reform is more important. In the environment of the socialist economic system, should be placed on three interrelated aspects:enhance the vitality of the enterprise; the gradual relaxation of the management of state enterprises; gradually perfecting the system of the socialist market. In addition, in the process of China’s financial system reform, we also need to coordinate the relationship between economic development and monetary and financial. At present, The trend of China’s economic and monetary financial has a qualitative change in the breadth and depth of the economy. Therefore, we need formulate monetary and financial policy coordination with China’s economic development goals, to avoid the financial industry from the economic development。In fact, the reform of the financial system is not only financial issues, not just economic issues, but with our society’s political and economic development are inseparable。So, designing a reasonable financial system reform program is not base on some presumptions of the endogenous mathematical model,also cannot simply use rent-seeking chance to avoid the risk of moral and new classical financial constraint theory,.It should be look financial as the basic elements of the social development and economic growth and be inspected comprehensively with the historical and the humanistic eyes.In shot,the thinking of financial system reform should apply various ideas to provide financial support for our national economic development,so as to facilitate the sustainable development of the economy in our country.Besides, this paper checked the original data of financial repression, financial restraint, financial freedom and financial deepening by the methods KMO and Bartlett, and get the index data that to measure them by principal component analysis of these data. On the base of this, the paper get the relationship between them using Stationary Test and Cointegration Test of Time sequence, and then give some suggests for our country’s financial reformation. from the perspective of the study of financial development, we should pay attention to the relationship between financial and economic development and the effects of market price mechanism on the financial development, coordinate th e development between financial and economic, deepen financial reform, and esta blish a market financial system that is suitable to our social’s market economy sy stem. We need to recognize the long-term and difficulty of establishing and improving the financial system. If the focus of financial liberalization is financial deregulation in foreign, the focus of financial reform is the "standing" to establish a new market financial system in china. More important is that China’s market and financial system must be established on the basis of public ownership, and be conversed the management system.