Financial Development and Economic Growth Based on the Panel Data (1994-2005) of All Provinces in China

This paper uses the panel data (1994-2005) of all provinces in China and takes the important factors (investment, import and export, human capital, FDI, government expenditure and so on) which impact Chinapsilas economic growth as control variables, employing the two-way fixed-effect model and GMM method (Panel Generalized Method of Moments) to estimate the correlation between financial development and economic growth. The empirical research shows that financial intermediary development has a significant positive correlation with the economic growth, but the financial interrelation ratio (FIR) doesnpsilat indicate this.