Financial Scale,Financial Structure And The Increase In Innovation Ability From The Perspective Of Institution Vicissitudes

During more than 30 years of reforms and opening,our economy driven by poduction factors have congtributed the average annual growth of 9.8%.However in recent years,with the gradually occuring problems,for example,the natural resource depletion,environmental pollution and population aging speedup,along with the continually weakened global economy since the financial crisis in 2008,it is unsustainable still to take traditional extensive economic development pattern.Consequently,it is the priority to turn to the economic development driven by intensive innovation and efficiency.Meanwhile,to ascend the innovation ability directly decide the success across the "middle-income trap" in China's future.So from the perspective of institution,this article study the relationship and internal mechanism between the financial scale(financial markets and credit markets),financial structure and the innovation ability,providing theoretical reference for China to transform economic growth propulsion.Starting from the functions of the capital market and the costs of innovation financing,also considering the lasted long process and tremendous risk of innovation,we built a general equilibrium model of our country economy in this paper,aiming to interpret the relationship and mechanisms between financial scale,financial structure and the innovation ability.Secondly the institution was introduced in the model to explore the regualtive effect of institutional change on financial scale,financial structure innovation effect.The basic function of capital market is inter-temporal and-spatial resource configuration,mainly through processing the risk and information asymmetry in the trade.And innovation financing itself accompany with great risk and information asymmetry.So the development of the capital market directly affect the ability of the economic innovation.Based on the theory of this article,it is implied that the development of financial market and credit market in China will be conducive to ascension of innovation ability.In addition,different forms of financing treat the risk and information asymmetry in different ways.Therefore different financial system structure will also produce different effect on the economic innovation ability.It is showed in theory analysis that financial structure tending to market-oriented will be conducive to ascension of economic innovation ability.Finally our country institution has experienced great changes during nearly 30 years,which has produced profound influence on the behavior of economic agents.Therefore the institutional vicissitudes inevitably have caused the change of economic system accordingly,which influenced the innovation effect of financial scale,financial structure.Institutional factors focused by this article mainly are the ownership structure and opening to the outside world.It is suggested according to theoretical analysis that ownership structure tending to state-owned enterprises share increase and less degree of opening to the outside world will enhance the innovation effect of financial scale,financial structure.Based on the above theoretical analysis,in the third and fourth parts of article we use the spatial panel model to examine the panel data of 30 provinces in mainland China from 2001 to 2012,aiming to study the innovation effect of financial scale and financial structure and the regualtive effect of institutional vicissitudes.Research shows that the development of financial market and credit market are conducive to improve innovation ability.Our empirical analysis implies that the relationships of financial structure and innovation ability are "inverted U" type.As the proportion of direct financing in the financial system increases,innovation ability will improve.But with the increase of the direct financing,the innovation ability will gradually decrease.After reaching a critical point,much more direct financing in financial system will hamper innovation.In addition,we use the spatial GMM estimation model to reexamine the innovation effect of financial scale,financial structure from the perspective of institutional vicissitudes again.Results shows that financial structure tending to market-oriented has a promoting effect on innovation ability.According to regression regarding institutional regulation conveys that ownership structure tending to state-owned enterprises share increase inhibit the innovation effect of financial scale and financial structure.However opening will promote the innovation effect of financial structure and financial market,contrarily having negative effects on innovation effect of credit market.Finally,according to the analysis and test,this paper puts forward the following policy suggestions: 1.It is necessary to develop our country's financial market and credit market and improve the function and efficiency of their financial services.Optimize the financial structure and elevate the proportion of financial markets.2.The government should further deepen the reform of state-owned enterprises and improve the ability of innovation in them,avoiding the policy tilt to state-owned enterprises.On the contrary,they should decrease the regulation of entering the industry dominated by state-owned enterprises,which will increase competition in the market.3.Such measurement,for example,continuing to promote the opening to the outside world,cultivating new comparative advantages in our country,enhancing the innovation ability of industry in our country,should be taken to elevate our country's position in global value chain and form a favorable circulation between innovation development and rising position in the value chain.