The Impact Of Financial Development On Economic Growth And Industrial Stucture Adjustment

Finance is the core of economic development and it plays an important role in economic development, so the relationship between finance and economic development has attracted extensive attention of scholars at home and abroad. Since the reform and opening up, China has made great achievements in economic development. Along with economic development, the financial industry has undergone tremendous changes, increasingly rich financial products, financial institutions and financial markets gradually improve. Finance has become important means for government to macro-control and optimizes social resources. Economic development mainly reflected in two aspects:one is the increase of economic aggregate, and another one is economic structure adjustment and optimization. So many scholars committed to research the role and impact of financial development on economic growth and industrial structure adjustment.This study has summarized related literatures from the meaning and measurement of financial development, the relationship between financial development and economic growth as well as the relationship between financial development and industrial structure adjustment. The existing literatures shows that the research remain to be further perfect as following:1.measure the regional financial development scientifically.The existing researches focus on the relationship between financial development and economic growth or other variables, and ignore the measurement of financial development.2.The existing researches mainly test the linear relationship that financial development influence on economic growth and industrial adjustment, but the nonlinear relationship hasn’t attracted enough attention. Based on these, the problems this will resolve are as following:constructing an evaluation index system of regional financial development and measuring the financial development of each province in our country. And then, the study will research the role and impact of financial development on economic growth and industrial structure adjustment. Through empirical study, this research has the following main conclusions:1.This study has constructed an index system of regional financial development and measured the financial development of each province in our country. This research selected egight indicators to refelect reginoal financial development,and they are financial interrelation ratios, the proportion of financial industry, insurance penetration, the number of A shares investors, the number of listed companies, the number of financial professionals, the stock market liquidity and government credit interventions. The eight indicators are divided into three dimensions, financial depth, financial scale and financial efficiency, by factor analysis. The weight of each indicators are indentifed according to the result of factor analysis. The financial development of31provinces from2004to2009are measured by the use of comprehensive evaluation.In the progress, the membership are obtained by fuzzy c-means clustering.The results showed that the financial development of most provinces of China are in a medium level. The provinces with high-level financial development is less, mainly in Beijing, Shanghai, Guangdong, Jiangsu and Zhejiang.The financial development of many provinces, such as Mongolia, Jiangxi, Guangxi, Guizot, Qinghai,has been in a low level. From the perspective of geography,the financial development of the eastern regions are higher than the central and western regions, and the financial development of the western regions are in a lower level.2. This study has tested the nonlinear relationship that financial development influence on economic growth and industrial structure adjustment. In order to explore the nonlinear relationship,the research has built two RBF neural network models that financial depth, financial scale and financial efficiency are inputs and economic growth and industrial structure adjustment are outputs. The empirical ananlysis has been completed with the data of31provinces in China from2004to2009.The training results of RBF neural network models with all samples,high-level samples,medium-level samples and low-level sapmles show that the error between simulation value and real value meet the requirements. Acorrding to the result,it find that there is a nonlinear relationship between input variables,financial depth,financial scale and financial efficiency, and output variables,economic growth and industrial structure adjustment.Comparing with the effect of RBF neural network training, the nonlinear relationship that financial developmet influences on economic growth and industrial strcucture adjustment is different in different level. The error between simulation value and real value is least with the financial development in high level,and it also shows that the nonlinear relationship is stronger and more obvious in high level.3. This study also shows that the changes of regional financial development will influence on economic growth and industrial structure adjustment,but the direction and extent of the impact is dynamic. In three different levels of financial development,it find that the change of fiancial development all will have impact on economic growth and industrial structure adjustment by sensitivity analysis,but some of them have posstive impact and some have negative impact. In different levels of financial development, the changes of financial depth,financial scale and finacial efficiency have different impact on economic growth and industrial structure adjustment,and the impact is dynamic.From the overall trend, it is most sensitive that the change of financial depth,financial scale and finacial efficiency have impact on economic growth and industrial structure adjustment with financial development in medium level,and financial development in low level is following.While the financial development is in high level, the impact isn’t sensitive. Of the three factors,the change of financial depth have the most impact on economic growth and industrial structure adjustment,and financial scale is following.The change of financial efficiency have the least impact on economic growth and industrial structure adjustment.This study is the extension and expansion of existing research.Compared with existing research, there are two innovations as following:1.The first innovation is that the index system of regional financial development is improved and developed and the regional financial development is measured with the index system.Acorrding to the meaning and theory of financial development, his research constructed an index system of regional financial development by factor anlysis. Based on this, the financial development of31provinces in our country are measured by fuzzy c-means clustering and fuzzy comprehensive evaluation.2.The first innovation is that a nonlinear relationship about financial development with economic growth and industrial structure adjustment is tested. In this study, the nonlinear relationship is tested by the RBF neural network, and the impact financial development have on economic growth and industrial structure adjustment is discussed by sensitivity analysis.