Research On The Relationship Between Financial Structure And Economic Development

Financial markets are scrambling for expansion around the world to promote economic prosperity in recent years,but we are also in a very dangerous situation because of the economic bubble.The development of economy stocked again and again,and threaten by the financial crisis.Optimal financial structure theory provided us a new direction of the research of financial structure.Based on the financial development playing a very impotent role in economic development has became common consensus,financial structure is decided by the actual needs of the industry of financial services,and it should have an impact in economy.In this paper,based on the theory of financial structure,financial arrangement which is financial structure has influence mechanism on economic in the process of economic development.On the base of theory of financial structure,analysis the connection of the new structure of economics between the optimal financial structure.According to the Pareto improvement of financial structure,we find the influence mechanism of the optimal financial structure and the structure of industry.there is the difference between developed countries and developing countries in the financial market and industry,In this paper we use the developed and developing countries panel data empirical test to prove the existence of optimal financial structure in the developed economies and developed economies.That financial structure inverted "U" type is established,respectively,in the developed economies and developed economies.Then we finger out the relation between financial structure and economic development from the perspective of industrial structure.We mainly use the GMM dynamic panel regression model to prove financial structure and economic development has an inverted "U" shaped correctness in developed economics and developing economics.Results showed that the financial structure and economic growth has inverted "U"shaped relationship in developed economies,while in developing economics they show positive correlation.So we prove that financial structure has one optimal financial structure in advanced economies,at that point economic achieve the maximum of growth.and in developing economies,the greater its financial structure value is,the greater the economic development.We believe that the connect between financial structure and economic development at the point of “up” process in the inverted "U"shaped.According to this conclusion,we use the new structure of economics and the optimal financial structure theory to analyzethis phenomenon,and we clarify that the industry has impact on financial structure,then the structure of financial has influence on economic.They push each other to growth and promote the overall development of economy together.Each one party lead or lag will bring adverse effect to the development of the economy.According to the analysis,we find now there are typical problems in the development of world economy that industrial structure and financial structure doesn't fit each other.Then we give some recommendations for development of financial and industry about China.