An Research Of Financial Liberalization On Investment

The word "Financial liberalization" comes from the theory of financial deepening which was proposed by the eighteen seventies economists Ronald Mackinnon and Edward Shaw. The theory insisted that the developing country existed "financial repression" phenomenon that hampering financial development and economic growth, in order to break this phenomenon, the government must execute the financial liberalization reform, including decreasing the government deregulation of the financial sector restriction and intervention, allowing market forces to determine various financial factor price level then guide the development of the financial system and improve the financial market efficiency, optimize resource configuration, stimulative economy growth. By the influence of this theory, many developing countries have carried out the financial liberalization reform, such as Argentina, Brazil, Uruguay, South Korea, Malaysia,Thailand. The results of the financial liberalization reform of these states are not the same, East Asia countrys’reforms could be said to be successful, but Latin America is not so. These countries’experience seems to reveal such a view:the gradual financial liberalization reform is conducive to economic growth, but radical liberalization reform intensifies the financial fragility. However, the2008financial crisis makes people begin to pay close attention to financial liberalization again, which role of financial liberalization play in economic growth, and how to affect economic growth? These problems are worth us to do more in-depth exploration and research.Compared to market economy reform, the financial liberalization reform of our country was relatively backward, but it still obtained greater progress. The effect of financial liberalization on economic growth is gradually being concerned. The mechanism of financial liberalization affecting economy growth can be summarized as follows:to increase the savings rate, to improve the conversion rate of saving to investment and to improve the investment efficiency. But as a result of the cultural tradition, the imperfect social security system and the single channel of consume and investment, since1979, China’s savings rate has been maintained at the high level of more than32%(Zhu zhijun,2007), savings gap (the variance of investment minus savings) is negative in most of years, there is little savings constraint on the economic growth. Therefore, the financial liberalization how to influence the growth mainly depends on investment quantity and the improvement of investment efficiency. Therefore, this paper chooses investment as the main research object, through the construction of financial liberalization index to analyze how financial liberalization affects the amount of investment and investment efficiency, which has very important theoretical and practical significance to the further promotion of the Chinese financial liberalization reform, to improve the efficiency of resource allocation and to promote the transformation of mode of economic growth. By reference on the basis of existing research results, this article mainly divides into five major parts. The first chapter includes background and significance, research contents and structure of this article, the innovation and weak of this paper as well as the domestic and foreign research theory review. The second chapter mainly elaborated that our country’s financial liberalization and financial liberalization reform achievements and problems. The third chapter mainly introduces the theory related to investment and the way how financial liberalization affects on investment. The fourth chapter is mainly empirical research, which is also the focus of this paper. The first part is1979-2010years financial liberalization index construction, the next is the empirical analysis of financial liberalization’s impact on the amount of investment and investment efficiency, the results are obtained by establishing cointegration equation and error correction model. Chapter fifth combines the results of empirical analysis and the current situation of our country and put forward the corresponding policy suggestions.