Financial Development:Restraining or Promoting Economic Growth

Based on the extended Odedokun dichotomy model,this paper establishes the multiple linear regression model between economic growth and financial development.By making use of 1952-2011 annual data of Jiangxi province,it analyzes the relationship between the financial development and economic growth in Jiangxi province.It then draws three conclusions as follows:(1) what influences the economic growth in Jiangxi is not only the financial development scale but also the financial development efficiency;(2) there is a significant causal relationship between the financial development scale and the economic growth in Jiangxi,and it is a positive correlation,which indicates that the financial development scale and the economic growth in Jiangxi can promote each other;(3) the financial development efficiency in Jiangxi is influencing its economic growth unidirectionally,and is operating as impediments to the economic growth,which indicates that the low efficiency of the financial development in Jiangxi has restrained its economic development.Therefore,in order to promote the economic growth in Jiangxi,the following measures should be taken,such as expanding the financial development scale,improving the deposit-loan ratio of the financial institutions,improving the savings-investment conversion rate,encouraging consumption and investment,decreasing the savings rate properly and increasing the productivity of marginal capital.