An Empirical Study Of The Relationship Between China's Banking Development And Economic Growth

Over the past 40 years of Reform and Opening-up,maintaining a high growth rate,China's economy surpasses several large western groups in succession and becomes the second-largest economy in the world.At the same time,China's financial industry also develops steadily.The banking industry is the main pillar of China's financial industry.The business and functions of banks determine the role of banks in the development of national economy.Therefore,the research on the development of China's banking industry and economic growth has a certain practical significance.Therefore,there are two research contents in this paper:one is the development of China's banking industry and the other one is the relationship between banking industry and economic growth.26 listed commercial banks are chosen as the research object,and classifies them into large commercial banks,joint-stock commercial banks,urban commercial banks and rural commercial banks according to the classification of the CBRC.The data are from Bloomberg Terminal and annual reports of the banks.The research of development of China's banking industry obtains the following three conclusions:1.Analyse the banking industry from three macro-dimensions,and finds that the scale and efficiency of the banking industry are constantly improving while the value of the banking structure is decreasing year by year.The monopoly status of China's five major banks is gradually broken.2.Four risk monitoring indicators are selected:deposit-loan ratio,non-performing loan ratio,capital adequacy ratio and reserve coverage ratio,and the data are analysed by descriptive study according to the nature of banks.It is found that 26 listed commercial banks in China basically meet the regulatory requirements of the CBRC.Apart from the fact that the non-p,erforming loan rate of Agricultural Bank is far higher than the regulatory requirement before the joint-stock reform,there are no differences among large commercial banks.Sensitive to national policies and macro-economy,the differences between joint-stock commercial banks are obvious,and timely adjustments are made to meet regulatory requirements or enhance operational capacity.The differences between urban commercial banks are gradually increasing.The rural commercial banks,strictly abide by the regulatory requirements of the CBRC.3.Four financial indicators are selected:return on assets,net interest margin,benefit ratio and operating profit margin,and the data of 26 listed commercial banks in 2017 are clustered.Based on the dendrogram,the clustering parameter of K-means clustering is determined to be 4.Thus 26 listed commercial banks are classified into four categories according to their profitability.It is found that large commercial banks maintain a medium level of profitability.The development of joint-stock commercial banks and urban commercial banks is uneven.They are distributed in all four categories,while rural commercial banks are distributed in the first and fourth categories.About the relationship between banking and economic growth,panel data model is built to analyze the relationship between banking credit investment and economic growth from 2009 to 2017,and two conclusions are following:1.The analysis of the relationship between the loan of large commercial banks and GDP shows that the investment elasticity coefficient of real estate industry and industry is the highest,which can effectively convert the loan of large commercial banks into GDP.The elasticity coefficients of construction industry,transportation industry and wholesale and retail industry is similar,which are slightly lower than that of industry.The financing demands of accommodation and catering industry and financial industry for large commercial banks are not high and the elasticity coefficients are low.2.The analysis of the relationship between the loan of joint-stock commercial banks,city commercial banks and GDP shows that the elasticity coefficient of the tertiary industry is the highest,followed by the secondary industry,which is much higher than that of the primary industry.At last,this paper summarizes the research contents and puts forward corresponding suggestions to promote the sustained growth of the national economy according to the conclusions.