Empirical Research on the Interactive Relationship between Regional Financial Development and Economic Growth in Lianyungang City

Abstract

It has always been the hot topic as how it works between the financial development and the economic growth. How about it in Lianyungang city, the leading developing coastal city? By applying VAR Model and Granger Causality Test, the article studies the relationship between regional financial development and economic growth in Lianyungang city in the period from 2000 to 2011. The empirical results provide support for the hypothesis that there is a long-term cointegration relationship between the regional financial development and economic growth, but this relationship is not so significant, and there is no Granger causality between the both. So a further development should be made in financial industry and allocative efficiency should be better to lead to a sound interaction between them.