The Relationship Between Financial Development And Foreign Trade Of Henan Province

Financial development and foreign trade as two important forces of modern economic development,the contribution of both to economic growth is also increasingly high,and the relationship between the both are interrelated and mutually promoted in the process of economic development.At present,the research on the relationship between financial development and foreign trade is less,and the theory of financial development focuses on the impact of economic growth,which rarely involves the impact of foreign trade.The theory of international trade has been gradually considering financial factors in recent years,but it has not formed a systematic theory.In fact,with the improvement of financial function,the stimulative effect of financial development on trade will be more and more intense.The development of international trade,especially the transformation of trade structure,puts forward more requirements for the financial sector,then it will promote the development of the financial industry.The foreign trade and financial development level of Henan province is still relatively backward.With the construction of central plains economic zone and the establishment of free trade zone in Henan province,the development of financial and foreign trade play a vital role in promoting the development of local economic growth..Firstly,this paper summarizes the present situation of domestic and foreign research on the relation between financial development and trade,and summarizes the theoretical basis of financial development and foreign trade relations.Then on the basis of the existing theory and research,the paper concludes the mechanism of financial development to foreign trade from the perspective of financial functionalism and scale economy,and the mechanism of foreign trade to financial development from the perspective of factors,exchange rate and institutional perspective level.Then,starting from the reality of the development in Henan province,this article describes the development status of financial industry and foreign trade in Henan province.On the basis of above analysis,using relevant data,this paper sets up the index and constructs the VAR model of financial development and foreign trade,then it verifies the stability of the model.This paper also verifies the equilibrium and causality of variables and analyzes the influence of fluctuation of variables.The empirical results show that the financial development and foreign trade in Henan province have a long-term equilibrium relationship.Financial development is the Granger cause of the foreign trade,and foreign trade is not the Granger cause of the financial development,but there exist mutual impact effect.According to the full text analysis,it is found that Henan's current finance and foreign trade are at a low level of development.Financial development has a positive effect on foreign trade,and foreign trade does not have a significant driving effect on financial development.Finally,on the theoretical and empirical basis,combined with the reality,in order to make Henan province better to achieve the interactive development of finance and trade,the paper put forwards corresponding policy suggestions.