Abstract
The relationship between financial system and economic development is not a simple linear relationship. In some cases, the development of finance may not improve the economic development level. This paper studies the influence of the financial system on the high-quality economic development, constructs the comprehensive index of the financial system by the factor analysis method, and calculates the green total factor productivity as the index of high-quality economic development by the CRS multiplier model. Empirically, this paper takes the panel data of 30 provinces, municipalities, and autonomous regions in China from 2005 to 2018 as samples, constructs the panel threshold model, and applies the financial system, economic development level, infrastructure, and industrial structure as threshold variables to study the nonlinear relationship between the financial system and high-quality economic development. The results demonstrate that the impact of the financial system on the high-quality economy presents an inverted U-shaped relationship when the financial system and industrial structure are the threshold variables, indicating that there is an optimal interval, that is, when the financial system threshold is between 0.1355 and 0.1377 and the industrial structure threshold is between 0.1364 and 0.1408, the financial system plays a greater role in the allocation of funds and has the most obvious positive impact on high-quality economic development. Meanwhile, the impact of the financial system on the high-quality shows a marginal decreasing trend when the economic development level and infrastructure are the threshold variables; when the economic development threshold is less than 0.1409 and the basic setting threshold is less than 0.1167, the financial system has the greatest effect on promoting high-quality economic development. Based on the research results, targeted policy suggestions are put forward.
Highlights
As the key of modern economy, finance plays a role in promoting high-quality economic development by reflecting and guiding the real economy to achieve the reconstitution of economic factors
In terms of taking financial development as the threshold variable, Zilibotti [22] thinks that transaction cost and operation cost will be lowered when finance develops to a certain threshold value due to the existence of scale effect, which makes enterprises easier to obtain financing, helps technological innovation, and achieves economic growth, so financial development has a threshold effect on technological progress
TFPit α0 + Zitβ2 + θ2FCFit + μi + ξit, if qit > c, where i represents province; i represents year; TFPit represents high-quality economic development; Zit represents the set of control variables, namely, investment rate (ITR), population growth rate (PGR), urbanization rate (UBR), and industrialization rate (IDR); FCFit represents the financial system; qit represents the threshold variable (the threshold variables in this paper are financial system (FCF), economic development level (AGDP), and infrastructure (RPC)); c represents threshold value; μi represents individual effect; and ξit represents independent and identically distributed random disturbance term and is not correlated with FCFit
Summary
As the key of modern economy, finance plays a role in promoting high-quality economic development by reflecting and guiding the real economy to achieve the reconstitution of economic factors. By the end of June, the national banking financial institutions had issued 6.9 trillion yuan of inclusive loans to micro and small enterprises. In 2021, Xi ’an Branch of the People’s Bank of China took the lead in issuing Guiding Opinions on Financial Support for High-Quality Development of County Economy, aiming at giving full play to the role of county financial organization system in highquality economic development. E contributions of this article can be summarized as follows: First: the green total factor productivity with multiple input and multiple output, expected output and nonexpected output, energy and environment, and so on is constructed as an index measuring high-quality economic development, and it is more in line with the economic characteristics that China’s economic growth rate is slowing down and entering the stage of highquality economic development.
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