Research On The Impact Of Financial Development On Urbanization Process

Ever since the founding of new China, especially since reform and opening up,we have made marvelous accomplishment in urbanization movement of China. Manyresearchers are devoted to studying how to improve the urbanization.In the process ofurbanization, a lot of farmers went into city, the city has to build many publicinfrastructure, such as hospital, public garden, libraries, and roads, high-bridges,railways and so on. All these programs need a lot of funds. Nowadays, the fundsdepend on the government financial investment, bank loans.However, governmentfinancial investment is limited. It is not good for the urbanization.Reasonablefinancial development can promote the urbanization. Hence, it is meaningful in theoryand practical h to research the relationships between financial development andurbanization.According to urbanization definition posed by researchers with various disciplinebackgrounds, the paper summarizes the urbanization definition in two contexts:demography and economics. The paper analyzes three indicators:FIR、FE、CR.Thedata is about19years from1993to2011of31provinces.The paper creates PVARmodel to analyze the impact of financial development on the urbanization.The resultsshow that financial development has a positive influence on the urbanization. Fromthe impulse response diagram, financial development size can boost urbanization;financial development efficiency can boost urbanization. From the results of variancedecomposition, financial development size and financial development efficiency canboost urbanization.Based on principles of economics, the paper researches on how the financialdevelopment to influence the upgrading of industrial structure. The paper analyzesthree indicators:FIR、FE、IS. The paper creates a dynamic panel data model toanalyze that how the financial development to work on the industrial structureupgrading. From the results, we can know that financial development is good forboosting the industrial structure upgrading, but the function has a certain lag. That is to say, current value of financial development will not affect current industrialstructure upgrading immediately, but the financial development will have an influenceon the subsequent industrial structure upgrading.