Research On The Impact Of Financial Development On Domestic Savings Rate Based On Provincial Panel Data Of China

With the continuous advancement of economic financialization,the role of the financial system in economic development has become increasingly important.On the one hand,the accumulation of capital is an inexhaustible motive force for a country's economic growth and industrial development.On the other hand,capital is derived from savings,but the savings rate is not as high as possible,and excessively high or low savings rates will lead to various socio-economic problems.Both ends of the financial market are linked to the supply and consumption of capital.Financial market plays a crucial role in the change of the saving rate.The improvement of financial development can not only improve the efficiency of savings and investment conversion,but also increase the efficiency of capital allocation,and help to promote the upgrading and transformation of China's industrial structure and sustainable economic development.For example,the continuous development of the high-tech industry in the US Silicon Valley also benefits from the developed capital markets of United States.Therefore,studying the impact of financial development on China's domestic savings rate has important theoretical and practical significance.The study of the impact of financial development on savings rates has always been a major issue in the research of China's savings rate.At present,studies on the effect of financial development on savings rate are still inconclusive.There are linear correlations(positive and negative),non-linear correlations(inverted U-shaped,etc.)and irrelevance between financial development and savings rate.By sorting out existing literature,this paper finds that most scholars in the past separately studied the effects of financial development on the resident savings rate or the corporate savings rate.When it comes to studying the effects of financial development on the domestic saving rate,few scholars have thought about both ends of the financial market.We know that the improvement of financial development will affect both the savings rate and the level of investment.Under certain conditions,savings equal investment,so the impact of the financial development on the savings rate may not be a simple linear relationship.This paper uses provincial panel data from 2001 to 2016 of Chinese 31 provinces and municipalities to test the impact of financial development on China's domestic savings rate.The empirical results of this paper show that the relationship between financial development and the domestic savings rate has an inverse U-shaped relationship,that is,when a country or region has a low level of financial development,its savings rate tends to increase as the improvement of the financial development,and when the level of financial development improves to a certain extent,the savings rate tends to decline as the level of financial development continues to increase.The inverted U-shaped relationship between financial development and savings rates suggests that financial frictions may lead to excessive savings or insufficient savings,depending on the extent to which financial markets support family and corporate.Therefore,in advancing the reform and opening-up of the financial sector,we must also take into account the improvement of the financial environment facing businesses and households,and to provide a stable and continuous supply of capital for economic growth.