Analysis of the Relationships between Financial Development and Sustainable Economic Growth: Evidence from Chinese Cities

Chao Gao, Dequan Yao, Jiayu Fang and Zhengchu He
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Chao Gao: College of Finance and Statistics, Hunan University, Changsha 410006, China
Dequan Yao: College of Finance and Statistics, Hunan University, Changsha 410006, China
Jiayu Fang: School of Economics and Management, Tsinghua University, Beijing 100084, China
Zhengchu He: School of Business, Xiangtan University, Xiangtan 411105, China

Sustainability, 2022, vol. 14, issue 15, 1-15

Abstract: At the stage of high-quality economic development, sustainable economic growth is worthy of attention. The supporting role of financial development for sustainable economic growth will become more important. This article aims to identify the influence of financial development on sustainable economic growth and its impact mechanism. Based on measuring the level of sustainable economic growth, this article theoretically and empirically identifies the impact of financial development on sustainable economic growth and its mechanism by adopting the panel data from 283 prefecture-level and above cities in China. The empirical results show that financial development is conducive to improving sustainable economic growth through the mechanism of capital deepening and technological innovation. Furthermore, for type I large and medium cities, financial development is conducive to enhancing sustainable economic growth, while the effect is not significant for type II large and small cities. Therefore, the local government could promote financial supply-side reform and implement differentiated financial development strategies for sustainable economic growth from aspects of capital deepening and technological innovation.

Keywords: financial development; sustainable economic growth; capital deepening; technological innovation (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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