The Effect Of China's Finance On Economic Growth And Policy Improvement

Finance is the core of economy.China has achived great successes on national economy since the reform and opening,which can not be separated from the support of financial development along with financial reform and policy innovation led by government from beginning to end.Whether financial development could affect economic growth,is essentially an importmant policy issue.The lesson from the global financial crisis is that financial development with overhigh level couldn't be divorced from the real economy,the improper financial policies would hinder economic development.It is worth rethinking that China's financial reform and development have grown rapidly since the global financial crisis,but the contribution to economic growth is limited.There needs to be innovation of economic and social public governance under the background of New Normal,the repositioning of financial development strategy is urgent.If China's economy wants to develop smoothly and healthily,it is necessary to needs to accurately grasp the relationship between financial development and economic growth,make correct financial policy and establish the modern financial system which adapts to economic New Normal.Therefore,the thesis first analyzes the process of the "finance-growth" nexus in theory and empirical literature,based on the AK model relying on endogenous growth theory,introduces the main channels through which financial policy and development affect economic growth.After that,the thesis reviews the course of China's economic and financial reform,analyzes the status and problems on financial development supporting economic growth.Aiming at the existing problems,the thesis renews and recalculates China's financial liberalization index,and relying on the index system established by foreign scholars,the thesis also combiles China's financial development index based on datas from 1998-2014,then analyzes the relationship between financial reform and financial development and takes an empirical analysis on the linkage between financial development index and actual per capita GDP growth rate with the application of ADF,cointegration relationship and Grainger causality test.Finally,according to empirical results,the thesis points out the direct reasons for " vanishing effect of financial development on view of three channels through which financial reform and development affect economic growth and analyzes the root from policy,and gives the advices on policy improvement.The research shows that China's financial reform process has been accelerating forward,financial development is presently in a relatively high positon,but the development of financial system is out of balance,financial institution payed attention to quantity and ignored quality,financial market developed poorly.Meanwhile,financial development and economic growth have a long-term and stable negative relationship,but not causal.Through research the author finds that financial development didn t accelerate capital accumulation,and didn t improve marginal productivity of capital more in recent years.Defects of financial policy arrangemnt,interest rate marketization reform lag,over financial positioning,are the policy origins that lead to" vanishing effect" of financial development.The author gives the advices that it should improve the effectiveness of financial policies from four aspects which include financial stability,inclusive finance,price liberalization and innovative finance.