Financial Development, Financial Structure and Economic Growth: Empirical Evidence from 32 Countries.
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| Title | Financial Development, Financial Structure and Economic Growth: Empirical Evidence from 32 Countries.
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| Author | Ji Zhihong and Bu Yongxiang |
| Organization | Research Department, the People’s Bank of China |
| Email | jzhihong@pbc.gov.cn；buyongxiang@ccer.edu.cn |
| Key Words | Financial Development; Financial Structure; Economic Growth; Median Regression; Panel Data Model |
| Abstract | Using World Bank Database of Financial Development and Structure, this paper sets up Quantile regression (median regression) model, OLS model on pooled data and Panel Data regression model respectively on 6 main financial development and structure indicators, and explores relationships of these indicators with economic development (proxy by GDP per capita) under the assumption that financial developments are fundamentally driven by real economic activities.We adopt samples of 32 world main economies as well as 17 economies with bank-based financial system ranging from year 1960 to 2009. Taking fitted values as world normal values, this paper also checks misalignment of China’s real values with world normal ones. Evidence shows that China’s credit to private sector is overdeveloped, and stock market capitalization, life insurance premium and private bond capitalization are also above world normal levels, meanwhile, China’s non-life insurance is underdeveloped and there is a big gap for China’s financial structure to move from a strongly bank-based one to a market-oriented system. This paper also forecasts preferred values of those 6 indicators within 12th five-year period and puts forward policy suggestions on China financial sector restructuring and efficiency enhancing. |
| Serial Number | WP472 |
| Time | 2013-06-26 |
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