Does trade openness affect financial development in China?

This paper constructed cross province panel data model to analyze the effect of trade openness on financial development in China and their difference in different regions with the data from 1991 to 2008 in 29 provinces. The results show that trade openness is conducive to enlarge financial scale,but not help to the improvement for financial efficiency in China.There is significantly different about the effect of trade openness on financial scale and financial efficiency in the east,middle and west region. In addition, we also find that the real income of residents and the entry into WTO are both positively correlated with financial scale,while they are negatively correlated with financial efficiency.