Research On The Impact Of Financial Repression On Economic Growth

Based on the theory of financial repression,this paper focuses on the relationship between economic growth and financial repression in Thailand.From the theoretical analysis and empirical test,it focuses on the mechanism and role of financial repression on economic growth,with a view to China and Thailand.The country’s economic and trade financial cooperation practice provides a certain reference.This paper first reviews the related concepts of financial repression and the measurement methods of financial inhibition index.One of the main innovations of this paper is to use the principal component analysis method of Demetriades and Luintel(1997)and the IMF financial reform database to integrate the core practices.,select appropriate indicator variables and construct a new financial suppression index.The main innovation of this paper is based on the theory of financial suppression and financial deepening.It constructs a theoretical analysis framework for financial suppression and economic growth around the two channels of industry and savings in Thailand,and empirically tests it.The empirical part of this paper verifies the following three hypotheses through a theoretical analysis framework.Hypothesis 1:Financial restraint policy has a negative impact on Thailand’s economic growth;Hypothesis 2:Financial restraint policy has a negative impact on Thailand’s economic growth through industrial channels;Hypothesis 3:Financial restraint policy has a growth channel for Thailand’s economic growth Negative impact.The research in this paper shows that financial restraint will have a negative impact on economic growth through industrial channels and savings channels,and vigorously implement financial liberalization reform,which can alleviate and eliminate financial suppression and promote economic growth to a certain extent.In view of this,this paper proposes the following four policy recommendations:deepen financial system reform,effectively reduce financial suppression;promote financial marketization reform,enhance foreign investment;promote industrial structure optimization,promote foreign trade;relax market access and promote financial openness.Reducing the degree of financial repression,implementing financial deepening,and expanding financial openness are inevitable choices for countries to vigorously promote economic development under the background of economic and financial globalization.To a certain extent,they also have policy objectives and consistency with the "The Belt and Road" initiative.Thailand’s economic and trade and financial cooperation have laid a good foundation.