Empirical Study On The Relationship Between Financial Development And Industrial Structure Upgrading In Shandong Province

Transforming the mode of economic development and promoting the upgrading of the industrial structure has been advocated in our country for a long time.The essence of the upgrading of industrial structure can be seen as the optimal resource allocation and the change of capital flow.Finance promotes capital flows and resource allocation through financial intermediation,financial products,and financial services.Industrial upgrading also promotes the development of the financial system and improves its service quality.Shandong Province is a large economic province in China.However,the province still has economic problems in which the industrial structure is not optimized and the adjustment of the industrial structure is relatively slow.Besides,the financial structure in Shandong is relatively single and the financial efficiency needs to be improved.Therefore,the study of the interaction mechanism between financial development and industrial structure in Shandong Province has important practical significance.The main study and conclusions of this paper are as follows:Firstly,based on reviewing and summarizing the achievements of scholars'research,this paper summarizes the theory of financial development and industrial structure upgrading and their mutual influence mechanisms.Secondly,based on relevant data,this paper makes an analysis of the financial development and the industrial structure in Shandong Province.Thirdly,using data from 1978 to 2016 in Shandong Province,the paper selects indicators in terms of financial scale,financial structure,and financial efficiency to empirically study the relationship between the overall level of financial development and the upgrading of industrial structure.The results show that in the long-term,the financial development can lead to the upgrading of the industrial structure.In variance decomposition and Granger causality tests,financial scale and financial efficiency contribute the upgrading of industrial structure,but the level of financial structure is not the Granger cause of industrial structure optimization.This is related to the imbalance of the financing structure in Shandong Province.Then,the author divides Shandong's financial industry into banking,securities,and insurance,and empirically examines the relationship between the development of various financial industries and the upgrading of industrial structure.The results show that there is a long-term and stable co-integration relationship between the development of the banking,securities,and insurance industries and the upgrading of the industrial structure.In the long run,the expansion of the banking industry can effectively promote the upgrading of the industrial structure,but the increase in the ratio of loans and deposits will cause the degree of upgrading of the industrial structure to decline.As for the allocation function,the expansion of the securities industry will lead to the industrial upgrading.However,an increase in the ratio of fund raising will cause a decline in the upgrading rate of the industrial structure.The securities industry in Shandong Province needs a further development.The increase in insurance density and the depth of insurance can all promote the upgrading of the industrial structure,and the three variables are Granger causality,indicating a good interaction mechanism between the development of the insurance industry in Shandong Province and the upgrading of the industrial structure.Finally,combining the empirical test results,the following policy recommendations were made for financial development and industrial restructuring in Shandong Province:continuously optimize financial structure,expand direct financing channels,build multi-level capital markets,properly control financial scale,improve financial system efficiency,and focus on financial development quality;give full play to the government's guiding role in the allocation of financial resources,and guide the flow of capital to emerging industries;formulate a reasonable industrial development plan for each of the three industries and speed up the transformation of the industrial structure.