Abstract
There is a close logical correlation between structural reform of the financial sector and the enhancement of financial institutions’ economic performance. In the existing research, however, there are disagreements and gaps relating to the efficiency measurement of the financial system’s input and output, as well as the impact of financial efficiency on the credit constraints facing the industrial sector. Based on China’s provincial panel data from 2008 to 2016, this paper measures and decomposes financial technology efficiency, and selects system equations to comprehensively test the internal and external transmission mechanism of financial technology efficiency. The research finds that: (1) The key to improving the efficiency of input and output of China’s financial system lies in the effective absorption and utilization of financial system reform and financial technology innovation, that is, the utilization efficiency of financial frontier technology; (2) The key to improving the utilization efficiency of financial frontier technology lies in the overall reform of the economic system, including the development of the private economy, the expansion of market opening, the acceleration of service industry development, and the promotion of technological innovation. (3) The improvement of financial technology efficiency is the key to reducing costs, de-leveraging and increasing efficiency in the industrial sector. It can effectively alleviate the credit constraints facing the industrial sector and promote its high-quality development. Therefore, it is necessary to promote the reform and opening up of the economic system with a view to promoting the efficiency of the financial system, rather than simply resorting to financial system reform and financial technology innovation.
Highlights
Given the strong asset specificity and high irreversibility of investment, the industrial sector is more dependent on the financial system [1]–[3]
Li et al.: Financial Technology Efficiency and Credit Constraints Facing the Industrial Sector on the real economy, existing studies mainly focus on the overall level and basic effects of financial development on economic growth [11]–[13]
Some studies try to build an evaluation indicator system to measure financial efficiency [22], [23]; some use Data Envelopment Analysis (DEA) to analyze the differences in financial efficiency among different regions in China [24], [25]; others focus on Stochastic Frontier Approach (SFA), such as Ma [26]
Summary
Given the strong asset specificity and high irreversibility of investment, the industrial sector is more dependent on the financial system [1]–[3]. Z. Li et al.: Financial Technology Efficiency and Credit Constraints Facing the Industrial Sector on the real economy, existing studies mainly focus on the overall level and basic effects of financial development on economic growth [11]–[13]. We decompose the financing constraints of the industrial sector into three parts: the real interest rate (ROI), the asset-liability ratio (Leverage) and the Total Assets Turnover Rate (ATR), and construct a system equation in conjunction with financial technology efficiency. This is comprehensively test the relationship between financial technology efficiency and financing constraints in the industrial sector, and avoid the endogenous problems in the econometric test.
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