Does financial structure matter for economic growth in China

Abstract Based on an extended neoclassical growth model, this paper explores the endogenous mechanism between financial structure and economic growth. Our theoretical analysis shows that there exists an optimal financial structure evolving to meet different demands of the real economy in the process of economic development. We then investigate whether financial structure matters for economic growth using a panel data of 29 provinces across the eastern, central, and western regions in China from 1996 to 2013. The empirical results show that financial structure has a significant impact on economic growth. However, the effect of financial structure on regional economic growth varies and presents an inverse U-shape. These results confirm the evolving effect of financial structure on economic growth at different stages of economic development.

• Publication year

  2020

• Venue

  China economic review

• Publication date

  2020-06-01

• Fields of study

  Economics

• Identifiers
  DOI 10.1016/J.CHIECO.2018.06.006
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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