The Effect Of Financial Development On Economic Growth In China

Enlightened by Levine,this paper explore the factors of economic growth from financial viewpoint.The proposition of relationship between financial development and economic growth has been probed many times.With the deepening of the research,the effect path of financial development to economic growth gradually become the focus of the scholars.According to it,this paper argues that the impact of the health of the financial system and the full play of financial functions on economic growth cannot ignore for the rapidly developing China.Therefore,deeply investigating the influence of China's financial development to economic growth is of great significance.At first,this paper explores the mechanism of financial development to economic growth by systematically reviewing the relevant theories.On the basis of the definition,this article built the four department endogenous growth model containing product production,research and development department,the department of financial development and the human capital department through the analysis of the mechanism of financial development to economic growth.And drawing the conclusion that there has a nonlinear relationship based on financial growth threshold between financial development and economic growth by using the method of mathematical derivation.Then,in order to test the results of theoretical analysis,the paper structure a variety of panel threshold model based on financial growth threshold using the panel data in China.The empirical results obtained that there has a robust nonlinear relationship between financial development and economic growth.And the relationship of financial development and capital accumulation is similar to the effect of financial development to economic growth.But the function of financial development to TFP and human capital accumulation is different.This article draws the following three main conclusions through the way of theoretical analysis and empirical test.Firstly,the nonlinear influence between financial development and economic growth is mainly caused by capital accumulation.But the significance of effect on financial development to economic growth is mainly affected by TFP and human capital accumulation.Secondly,the reasonable control of financial growth should be taken seriously.Financial growth is the critical conditions that financial development plays a positive effect on economic growth and economic sources according to the theoretical analysis.It is disadvantageous for economic growth whether the financial growth is too slow or too fast.Combined with the empirical results,we can learn that the financial growth is not conducive.It is not in a reasonable range that the financial development can play a positive part in the TFP and human capital accumulation.Thirdly,the level of financial development is imbalanced in different region in China through quantitative measurement and statistical analysis.And this difference has a intensified trend.The conclusions of this paper indicate that we shall attach important to the flowing three point during the period of financial reformation.Firstly,paying attention to the role of TFP and human accumulation.Secondly,it is of importance to keep a reasonable financial growth.Thirdly,developed distinctly in different region.