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

Author

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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)

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.

Suggested Citation

  • Chao Gao & Dequan Yao & Jiayu Fang & Zhengchu He, 2022. "Analysis of the Relationships between Financial Development and Sustainable Economic Growth: Evidence from Chinese Cities," Sustainability, MDPI, vol. 14(15), pages 1-15, July.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:15:p:9348-:d:876167
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    Cited by:

    1. Zhiqiang Zhou & Wenyan Liu & Pengfei Cheng & Zhenjin Li, 2022. "The Impact of the Digital Economy on Enterprise Sustainable Development and Its Spatial-Temporal Evolution: An Empirical Analysis Based on Urban Panel Data in China," Sustainability, MDPI, vol. 14(19), pages 1-23, September.
    2. Xiaohui Chen & Yiqing He, 2022. "The Impact of Financial Resilience and Steady Growth on High-Quality Economic Development—Based on a Heterogeneous Intermediary Effect Analysis," Sustainability, MDPI, vol. 14(22), pages 1-19, November.

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