The Impact Of Financial Efficiency On Export Growth And Its Regional Convergence In China

Efficiency is one of the core objectives of economic activities.Financial efficiencyfinally reveals a country’s financial development, and it combines "quality" with"quantity" of financial development, thus ensuring optimal use of financial resources tothe very firms and projects of the best prospects. This paper explores the impact offinancial efficiency onexport growth and its regional convergence, concerning aboutwhether financial efficiency has a great impact on export growth, and how this impactachieved; Whether the provincial differences of financial efficiency has a great impacton the regionalconvergent trendof export growth, and how this transmission mechanismworked, and theconvergent trenddistributed.Through the summary and comment of domestic and foreign studiesrelated withthe financial efficiency and international trade, based on the analysis of the properties offinancial resources, the sources of financial efficiency and dynamic efficiency evolution,using theoretical and mathematical derivation, this paper elaboratesthe mechanism ofimpact of financial efficiency on the export growth and its convergence, andproposesthehypothesis of the effects from financial efficiency to the export growth andits convergent trend. Then the paper measures the inter-provincial and regionaldifferences offinancial efficiency level and international trade growth, and analysistheirvariationsof regional differences.After that the paper sets the index system andclarifies the method to evaluate the financial efficiency, and establishes an empiricalmodel to test the real effects of financial efficiency on export growth and regionalconvergence. The paper then introduces the conditional β-convergence method toestablish a two-factor fixed-effects model, and selects30provinces’ panel data from arelatively steady stage (1993to2008) in China to make empirical test based on themodel.The final results show that:Firstly, after controlling the financial scale, foreign direct investment and otherfactors, China’s export trade growth shows a significant conditional convergent trendnot only in the whole country, but also within the main regions. It shows that when thereisa distribution of financial efficiency of different levels, long-term export growth willshow a conditional convergent trend. As for the convergent rate, the middle and westregions of China show a significant "late-mover advantage". That means the eastregionof China, compared to the middle and west regions,has been closer to its equilibrium level of growth, and thus results in a slower rate of growth; The west region of China isfurthest from its equilibrium level, and still in the initial stage of the export tradedevelopment; The gap of inter-regional export growth will persist.The regional exportgrowth will subject to various factors,andgradually converge towards their steady state.Secondly, from a national perspective, China’s export growth and financialefficiency shows a significant positive correlation, indicating that financial efficiencyhas a significant positive promoting effect on export trade growth. From a regionalperspective, the financial efficiency plays a significant positive role in promoting exportgrowth in the eastern region. While the central and western regionsare also found thepositive trends, but their effectsare not significant. One possible explanation is that thelow level of financial efficiency in the central and western regions could not guaranteean efficient allocation of financial resources, and limits the impact of financialefficiency on export growth, and thus eliminates itto bea main reason for theexportgrowth.