Study On Factors Affecting Total Factor Productivity And Its Western Financial Sector

Finance is playing a more important role in modern economy. It is a critical factor to keep the economy stable. Before the reform in1979, China adopted a command economy. The Chinese government controlled the distribution of capital, instead of the financial market. During the reform, China changed to a more market-oriented economy and the economy grows very fast. The rapid growth of financial industry is a strong support for the development of economy, and it has become the central issue modern economy. Financial industry in the west has great achievements during years’reform, including the enlargement of financial system, the enhancement of financial structure, and the integration with global standards. However, there are still many problems in the developing of financial industry. The low efficiency of using capital is one of the biggest obstacles. It is obvious that improving the financial TFP is very important. Based on a nonparametric Hicks-Moorsteen index approach, this paper has analyzed total factor productivity trend and the characters of its time sequences about financial industry in the west from2001to2011.The results indicate that, the average growth rate of financial industry TFP in the west which grows nearly straight is14.7%, and it’s mainly due to the improvement of technology efficiency before2007, while it is mainly due to the improvement of productive efficiency after2007. Meanwhile scale efficiency and scale allocation efficiency is highly relevant to productive efficiency.After analysing the factors influencing financial TFP by statal0, corresponding measures to improve the finance TFP in the west are provided through summarizing above content.