An Empirical Research On The Relationship Between Financial Development And Economic Growth In Anhui

There is a hot topic of research beening discussed by western theorists, which is whether financial development could affect economic growth. With economics’ deepening, foreign scholars and experts has yielded fruitful results about financial development theories, including mechanism of action between financial development and economic growth, financial repression, financial liberalization, financial markets and other aspects. As to research about relationship between financial development and economic growth, Domestic scholars is apt to refer to foreign research programs, research methods and status about economic and financial development in China.Although scholars have different research perspective, they are based on objective historical data about financial. Meanwhile, some scholars even introduces comparative analysis and other advanced research methods.With rapid socio-economic development, scholars has gradually realized that finance is playing an important role in the allocation of resources. Scholars have reached a consensus that financial development do affect economic growth, but they are difficult to give a conclusion about how financial development affect economic growth and influence depth. Using annual data (1989-2012), This paper selects vector autor regression (VAR) model as a framework and selects index about opening to the outside world, financial development, investment in fixed assets, labor input and economic growth as the indicator variables in the model. The purpose is to find ralative relationship between financial development and economic growth in Anhui province. The result Shows that the real economy will increase the demand for capital inputs in the short term, which will be bound to promote financial development; However, In the process of development of economy and finance, researchers found no causality. By reviewing the status quo, economic growth does not have any impact on finance, but according to VAR analysis of variance, financial development did promote economic growth under the sufficiently substantiated raw data level, and finance played the most important role in the four factors that affect economic growth. Some scholars also said that the factor of investment in fixed assets will slowly have a strong impact on economic growth from the fourth period,and then the factor of financial is no longer the most influential factor. Studies shows that financial development is inseparable from a good economic environment, that is, financial development must be based on economic growth. However, with regard to the interaction levels between this two factors, obviously economic growth have a more prominent impact on financial development. In a word, from the eight’s of the last century to the new century,financial development has made an outstanding contribution to economic growth in Anhui province, which is one of the reasons to stabilize economic growth.It is clear that in order to promote economic development, the development of a scientific and rational financial development strategy is very necessary.