Abstract: By adopting 31 provincial panel data from 2000 through 2011, the efficiency of financial development on improving economic growth (financial efficiency) is measured and discussed based on the Malmquist index method. On that basis, the macroeconomic influencing factors and the transfer mechanism in China are tested empirically by using the method of panel co-integration. The results show that financial structure, dual economic structure, ownership structure, the central government’s credit intervention level and financial marketization process are the primary macroeconomic variables that influence the financial efficiency in China. Among these variables, the financial structure and the ownership structure affect the financial efficiency via promoting the financial innovation efficiency; the dual economic structure cumbers the financial efficiency by lowering the financial allocation efficiency. On the other hand, the central government’s credit intervention level and the financial marketization process not only enhance the financial allocation efficiency, but also improve the financial innovation efficiency. tHowever, there is evidence that the positive effect of the financial marketization process on the financial efficiency is hampered by the central government intervention in credit system.
Keywords: Financial Efficiency, Financial Allocation Efficiency, Financial Innovation Efficiency, Panel Co-integration
source:Finance & Trade Economics ,No7,2013