Impact Of Distorted Financial Conditions On Capital Allocation Efficiency

The transformation of the economic growth model driven by large-scale government-led investment to the all-factor productivity support that depends on the efficiency of resource allocation is the main trend of long-term economic development transition in China.As an important expression of resource allocation efficiency,how can we go into the theoretical logic and Chinese characteristics of optimal financial conditions,distortion of financial conditions and resource allocation efficiency from the perspective of the intrinsic relationship between financial development and economic growth?It has very important theoretical and practical significance.The latest theory on the relationship between financial development and economic growth shows that there exists an inherent optimal financial condition suitable to the stage of economic development in a country or region.The distortion of financial conditions caused by the deviation between the degree of financial liberalization and the optimal financial conditions is an important factor that makes it impossible for a country or region to achieve the optimal level of growth.So,whether the effect of distorted financial conditions on economic growth works through the efficient channels of capital allocation in the real economy?Or is there an intrinsic link between financial distortions and the efficiency of capital allocation?Therefore,based on the theory of optimal financial conditions,this paper intends to study the theoretical relationship between distortion of financial conditions and the efficiency of capital allocationBased on the theory of optimal financial conditions,this paper puts forward hypothesis 1:the financial liberalization path following the optimal financial conditions is the basic condition for realizing the Pareto efficiency(or optimal efficiency)of capital allocation;Hypothesis 2:The distortion of financial conditions caused by deviation from optimal financial conditions will have a significant impact on the loss of capital allocation efficiency(or capital mismatch).On this basis,this paper studies the influence of financial distortion on capital allocation efficiency.The results show that the influence of financial distortion on the efficiency of capital allocation is significantly negative,which verifies the two hypotheses proposed.According to the conclusion of this paper,the key to improving the efficiency of capital allocation in our country is to reduce the distortion of financial conditions.At present,all provinces in our country have negative deviations in financial conditions.Therefore,raising the level of financial liberalization should be the focus of current policies.This paper puts forward concrete countermeasures and suggestions from the aspects of deepening interest rate market-oriented reform,deepening banking reform,advancing securities market reform,promoting the market-based formation mechanism of exchange rate,promoting the reform of foreign financial liberalization and implementing differentiated policies in different regions.