An Empirical Study Of The Impact Of Financial Structure On Economic Growth In Zhejiang Province

Weather the financial structure of a country or region could provide effectivefinancial services for local economic development, has been widespread concernedin academia. A large number of domestic and foreign research literature suggeststhat financial structure provides an impetus for economic growth, However,most ofresearches are only focus on financial development and economic growth. Specificto Zhejiang province, many scholars study the relationship of financial developmentand financial structure and economic growth only from the aspect of financialaggregates or financial intermediaries, with little considering the financial structurewhich is constituted by the banking, securities, insurance etc the meso level affectingeconomic growth. Zhejiang province economic growth ranked last in the country in2012,but the economic and financial of Zhejiang Province are in a leading positionin the country, aroused controversy, this indicates that the financial structure ofZhejiang province may be some imbalance with economic growth in a way.Therefore, for the deficiencies of the existing studies, the paper innovative integratedmeso-and macro-financial to examine the long-term and short-term impact of thefinancial structure of Zhejiang on economic growth.Firstly, this paper teases out deficiencies existed in the theoretical research andindicators selected of regional financial structure, from current relevant literature andtheories at home and abroad, presents selected indicators of financial structure andmodel selection of Zhejiang Province needs to be improved. Secondly, This paperlearns the foreign theory of the relationship between financial structure andeconomic growth, combined with the actual situation of the financial economy,analyze the transmission mechanism that financial structure acts on economicgrowth; then, make basic statistical analysis of the situation of the financial structureand economic development in Zhejiang Province on the basis of theoretical analysis.Finally, the use of principal component analysis introduces three financial structurefactor scores(financial total factor scores, monetary financing structure factor scores,financial efficiency factor scores),then put them with the per capita GDP growth rates to unidirectional Granger causality test, VEC model and impulse responsefunction analysis to examine the long-term and short-term impact on economicgrowth of Zhejiang financial structure, and the impact of such a direction, extent andtime lag. Through theoretical analysis and empirical research, we draw the followingconclusions:A. financial structure affects the savings rate, conversion rate of savings andinvestment, the marginal productivity of capital and industrial optimization throughthe financial function to influence economic growth.B. the current financial system dominated by banks in Zhejiang province. Thefinancial structure has been developed and is higher than the national average, butthe ability to direct financing needs to be improved. Level of economic growth hasbeen at the forefront of the country, but the economic structure did not meet theoptimal structure the economic development needs.C. financial total factor scores, monetary financing structure factor scores,financial efficiency factor scores are the Granger cause of economic growth.In thelong term, there is a reverse change relation between financial total factor andmonetary financing structure factor and the growth rate of per capita GDP,betweenfinancial efficiency factor and the growth rate of per capita GDP appear in the samedirection change relation; in the short term, changes in financial total factor onchanges in per capita GDP growth has a positive impact, changes in monetaryfinancing structure factor and financial efficiency factor exist a negative impact onthe growth rate of per capita GDP movements.Finally, the empirical results are compared with the theoretical analysis, basedon the reality of the situation, this paper presents the following recomendations:optimize the structure of the financial industry, improve service levels for thenon-state sector; solve practical problems and improve the quality of development offinancial markets; build complementary functions of the financial system, improvefinancial efficiency.