The Study Of Financial Deepening’s Impact On China’s Economic Growth

In recent years, China’s economy has ended the continuous high speed growth and then come into a period called "New normal". China’s economy growth has slowed down under such background, but this also lays the foundation for China’ economy structure adjustment and promotion, at the same time it creating conditions for financial deepening reform. Financial service industry is the core of modern national economy and it plays the key role in the process of promoting economic growth and development. Under the background of "New normal", with the gradual increase of the downward pressure on China’s economy, we must pay attention to the importance of financial deepening reform. Promoting financial deepening reform could improve the efficiency of financial system which could improve the efficiency of investment and stimulate economy growth. So, how to promote China’s financial deepening reform in this period is crucial for the development of China’s financial industry and economy transformation.In such background, it is necessary to analyze the internal logic relationship between financial deepening and economic growth and the transmission mechanism of this effect. This paper establishes an economic growth model including a financial efficiency variable to analyze the relationship between financial deepening and economic growth form a theoretical perspective. Based on the theoretical analysis, we constructs four relevant econometric models to analyze those problems-financial deepening’s impact on China’s economic growth and the transmission channels of this effect by using the static panel data of China’s 30 provinces. The theoretical and empirical test results signs that financial deepening has a significant and positive effect on China’s regional economic growth. And this impact relays on three transmission channels-Material capital, Human capital and Technology innovation caused by R&D. In these channels, Material capital and Human capital transmission channels have significant effect, however the Technology innovation channel is not significant. At last, this paper provides relevant advices for China’s financial deepening reform.