Study On The Relationship Between The Financial Structure And China’s M₂/GDP

Since the reform and opening up,M₂/GDP in China has risen rapidly,rising from 24.19%in 1978 to 203.1% in 2015,has already surpassed developed countries such as the United States and new economies,and continues to rise to date.M₂/GDP surface means the amount of money needed to produce a unit of GDP.China’s M₂/GDP is 203.10%,to product a unit of GDP needs 2.03 units of M₂.However,the M₂/GDP of developed countries has not been more than 1,China’s M₂/GDP is contrary to the principle of resource utilization efficiency,m2 /GDP is very high.In order to keep GDP growth,China needs more money supply.On the other hand,the ratio of China’s debt to GDP in 2015 reached 249%,and the debt ratio reached a new high.From the perspective of monetary creation,financial intermediaries such as banks create money by issuing credit.Therefore,combined with such high GDP ratio and so high M₂/GDP,we need to think about some of the correlation between the two.So this paper aims to explore the high monetization phenomenon from the perspective of financial structure,and analyze the reasons affecting the M₂/GDP.In the background of high M₂/GDP and debt ratios,the financial structure is the basic reason of M₂/GDP.Because of China’s strong financial policy,banks occupy a monopoly position in financing scale and asset structure,the capital market is late,the development is imperfect,financial instruments are single,leading to direct financing proportion,residents with low savings rate.This paper selects the VAR model,empirically tests the relationship between financial structure and M₂/GDP.Select the direct financing proportion,financial asset structure index,savings rate and non-performing loan ratio as independent variables,cointegration test shows that the direct financing proportion and financial asset structure index are related to M₂/GDP,the savings rate and non-performing loan ratio are positive correlation with M₂/GDP,and the impact of financial structure on M₂/GDP is increasing over time.Through theoretical and empirical test,the impact of financial structure on M₂/GDP.We found that issuing financial structure has influence of M₂/GDP.Based on the above conclusion,this paper puts forward three Suggestions,the proposed relative equilibrium of the financial system,the coordination of direct financing and indirect financing and government should play the role of support andsupervision three Suggestions.The first is to establish a relatively balanced financial system.The second is to Coordination of direct financing and indirect financing.The third is that the government should play the role of support and supervision.By deepening the reform,adjust and optimize the financial structure step by step,the end of the financial constraints,to better play to financial function and improve the efficiency of the financial system.