Study On Relationship Between Financial Structure And Economic Growth In China Based On AFRE

The global financial crisis led to a serious decline in real economy, witch once again led to the study on the relationship between financial development and economic growth. In recent years, with the continuous progress of financial reform, China’s financial market has been gradually improved, the financial industry has become increasingly diverse, innovative financial products and tools are emerging. In this context, China’s financial total continues to expand, the financial structure has been changed. The regional financing structure tends to be more diversified, and bank credit, stock and bond are the three most important modes of financing. Research on the effect of financial structure on economic growth in China, not only has important theoretical significance, but also has policy guiding value for China’s financial development.The concept of Aggregate Financing to the Real Economy(AFRE) in China is the theoretical and policy innovation, which provides a new and comprehensive perspective to study the relationship between economy and finance. This paper measures the space aggregation of AFRE and GDP. Then based on the data of AFRE, we analyze the effect of AFRE and financial structure on the economic growth using the spatial econometric methods.Our study shows that: There is significant spatial agglomeration and regional spillover effect both in China’s AFRE and economic growth, and the degree of AFRE is higher than that of GDP. AFRE will promote the development of the real economy and different financial structure will give different effect on the real economy especially after equity division reform. And the effect of bank credit on the economy is greater than direct financing. The resource allocation function of stock financing has been improved through the reform of equity division, and the efficiency of bond financing needs to be further improved. The radiation effect to the surrounding areas of Beijing, Tianjin and Hebei provinces is less than the Yangtze River delta area, and the effect of direct financing on economic growth is less than the Yangtze River delta and Pearl River delta area, but the effect of AFRE on economic growth is greater than the other two areas. The conclusion of this paper is of reference to optimize the allocation of financial resources and improve the financial reform.