Does financial structure matter for economic growth in China

Guanchun Liu and Chengsi Zhang

China Economic Review, 2020, vol. 61, issue C

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.

Keywords: Financial structure; Economic growth; Panel quantile regression (search for similar items in EconPapers)
JEL-codes: E44 G00 O16 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:61:y:2020:i:c:s1043951x18300828

DOI: 10.1016/j.chieco.2018.06.006

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