Financial Structure and Economic Growth: A Nonparametric Assessment

The issue related to whether Chinese financial structure matter for its economic growth has been illustrated in recent year. This paper utilizes the World Bank dataset during the 1992-2007 periods and adopts the neoclassical growth model and nonparametric estimating approach to study China´s financial structure and economic growth. The positive sign of the coefficient of financial structure variable in our results indicates the relative importance of the market-based system, which implies that financial structure appears significant in explaining Chinese output levels. Therefore, effective financial innovation should be adopted by Chinese government immediately.