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The Promoting Effect of Financial Development on Economic Growth: Evidence from China

Author

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  • Xianming Fang
  • Yu Jiang

Abstract

We study the promoting effects of financial development on economic growth in China. We investigate the effects of developments in the banking, securities, and insurance sectors on the outputs of China's primary, secondary, and tertiary industries. Since China's provincial economic growth shows significant spatial dependence, we construct cross-sectional spatial regression models to study effects year by year, and panel spatial regression models to study overall effects. Empirical results show that the banking and insurance sectors provide significant promoting effects on economic growth; the promoting effect of the securities sector is uncertain.

Suggested Citation

  • Xianming Fang & Yu Jiang, 2014. "The Promoting Effect of Financial Development on Economic Growth: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 50(1S), pages 34-50, January.
    • Handle: RePEc:mes:emfitr:v:50:y:2014:i:1s:p:34-50
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    Citations

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    Cited by:

    1. Seven, Unal & Coskun, Yener, 2016. "Does financial development reduce income inequality and poverty? Evidence from emerging countries," Emerging Markets Review, Elsevier, vol. 26(C), pages 34-63.
    2. Hao, Yu & Wang, Ling-Ou & Lee, Chien-Chiang, 2020. "Financial development, energy consumption and China's economic growth: New evidence from provincial panel data," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 1132-1151.
    3. Muhammad Tahir & Khizar Hayat & Nisar Ahmad, 2018. "Investigating the Influence of Financial Development Indicators on Economic Growth: Evidence from South Asia," Accounting and Finance Research, Sciedu Press, vol. 7(3), pages 1-9, August.
    4. Seven, Ünal & Yetkiner, Hakan, 2016. "Financial intermediation and economic growth: Does income matter?," Economic Systems, Elsevier, vol. 40(1), pages 39-58.
    5. Li, Guangchen & Wei, Weixian, 2021. "Financial development, openness, innovation, carbon emissions, and economic growth in China," Energy Economics, Elsevier, vol. 97(C).
    6. Zhang, Dayong & Cai, Jing & Dickinson, David G. & Kutan, Ali M., 2016. "Non-performing loans, moral hazard and regulation of the Chinese commercial banking system," Journal of Banking & Finance, Elsevier, vol. 63(C), pages 48-60.
    7. Guangdong Xu & Binwei Gui, 2021. "The non‐linearity between finance and economic growth: a literature review and evidence from China," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 35(1), pages 3-18, May.
    8. Chen, Ting-Hsuan & Lee, Chien-Chiang, 2020. "Spatial analysis of liquidity risk in China," The North American Journal of Economics and Finance, Elsevier, vol. 54(C).
    9. Samargandi, Nahla & Kutan, Ali M., 2016. "Private credit spillovers and economic growth: Evidence from BRICS countries," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 44(C), pages 56-84.
    10. Law, Siong Hook & Ng, Chee Hung & Kutan, Ali M. & Law, Zhi Kei, 2021. "Public debt and economic growth in developing countries: Nonlinearity and threshold analysis," Economic Modelling, Elsevier, vol. 98(C), pages 26-40.

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