Empirical Study on the Relationship Between Financial Structure and Economic Growth: An Example of Zhejiang Province
This paper uses the time-series data from 1978 to 2009 of Zhejiang province to make an empirical analysis on the relationship between financial structure and economic growth. The results show that: There is long-term stable equilibrium relationship betwee
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Empirical Study on the Relationship Between Financial Structure and Economic Growth: An Example of Zhejiang Province Songyan Zhang Abstract This paper uses the time-series data from 1978 to 2009 of Zhejiang province to make an empirical analysis on the relationship between financial structure and economic growth. The results show that: There is long-term stable equilibrium relationship between financial structure and economic growth in Zhejiang Province; Rapid economic growth is one of the reasons for the rapid development of the financial industry, while the rise of the financial sector in turns promotes economic growth in Zhejiang Province. At last, the author gives some suggestions based on the above analysis.
Keywords Financial structure Economic growth Cointegration tests Granger causality tests
253.1 Introduction Financial development theory is based on the theory of economic growth. The relationship between financial development and economic growth has been the research field of economists. As early as 1911, the Austrian economist Joseph Schumpeter expounded a well-functioning financial system can promote long-term economic growth. In 1969, Goldsmith supported this assertion through empirical research, he thought that there was a rough parallel relationship between the economic and financial development. In 1973, McKinnon and Shaw put forward the theory of ‘‘financial repression’’ and ‘‘financial deepening’’. Kapoor et al. developed static analysis of McKinnon and Shaw, they further clarified the important role of financial deepening that plays on economic development of S. Zhang (&) School of Economics and Management, Zhejiang University of Science and Technology, Hangzhou 310023, People’s Republic of China e-mail: [email protected]
S. Li et al. (eds.), Frontier and Future Development of Information Technology 2103 in Medicine and Education, Lecture Notes in Electrical Engineering 269, DOI: 10.1007/978-94-007-7618-0_253, Springer Science+Business Media Dordrecht 2014
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developing countries by the method of dynamic analysis. Endogenous financial theory that has been developed since 1990s emphasizes the improvement of capital efficiency is benefited from the key role that financial intermediaries and financial markets distribute capital to the best possible uses. After that, Diamond, Levine, Beck and many famous scholars had carried out a variety of theoretical and empirical researches on the relationship between financial development and economic growth. In addition, the domestic and foreign scholars mainly focus on the national level when they study the relationship between financial development and economic growth, while the district level is relatively rare, and it is especially uncommon on the study of Zhejiang Province. Since the reform and opening policy has been carried out, Zhejiang Province is one of provinces to realize rapid economic growth in eastern area of China. Therefore, the study of relationship between financial development and economic growth in Zhejiang Provin
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