Mechanism And Empirical Research On Financial Development Influencing Accumulation Of Human Capital In China

After human society entered the era of the knowledge economy, the role ofmateria l capital in economic growth re lative ly weakened. After th is stage, humancapita l is pla ying a more important role in the economic growth and it is a generaltrend that economic growth ma inly depends on human capita l. Finance is the corefoundation of the modern economy, which is directly related to the overalldevelop ment of economic society. Thus the combination of human capital and financewill greatly enhance the conversion of the accumulation of human capita l and humancapita l into speed and effic iency of real productivity. In the context of China’s rapideconomic growth, human capita l becomes a scarce resource, and therefore, it is veryimportant for financ ia l develop ment to promote the accumulation of human capita l ina stronger way. Under the framework of financ ia l develop ment theory, the presentpaper undertakes the study on the mechanis m of fina ncia l deve lopment acting on theaccumulation of human capita l.After introduc ing the theoretical basis of financ ia l developme nt andaccumulation of human capital, the paper constructs a mathe matical model offina ncia l deve lopment acting on the accumulation of human capita l based onendogenous growth theory. Financ ial development promotes the accumulatio n ofhuman cap ital by enhancing the financ ial system’s function of resource allocation,risk dispersio n and information processing. The study finds that the impact offina ncia l developme nt on accumulation o f human capital is both in direct and indirectways significant. The direct way is that financ ia l deve lopment provides sustainedfina ncia l support for ind ividua l human capita l deve lopment through expandingsavings, credit and insurance service coverage. By broadening the direct and indirectfina ncing channels, financ ia l developme nt provides human capital d evelopmentagencies with financ ia l services. The indirect way is that financ ial developmentinfluences accumulation of human cap ital through the pro motion of economic growthand increase of ho usehold income.The results show that the developme nt of China’ s fina ncia l intermediaries (banks)and financ ial markets(stock market and bond market) have a significant impact on theaccumulation of human capital, whereby through increasing average per capitaincome financ ial intermediaries ha ve significant impact on the accumulation of human capita l. The developme nt of China’s financia l intermediaries has a direct effecton accumulation o f human capita l and has a indirect effect on it by promotingeconomic development and increasing househo ld income. In addition, the impact ofthe development of financ ia l market on accumulation of huma n capita l is notsignificant in ind irect way, but the development of fina ncia l market has a s ignificantimpact on accumulation of human capital d irectly by promoting economicdevelop ment and increasing household income. The paper conc ludes with policyrecommendations fro m the aspects of the optimization o f the fina ncia l syste m,improvement o f the fina ncia l environment and innovative financia l tools.