Empirical Analysis on Relationship between China's Financial Development and Economic Growth——Based on Nonlinear Causality Test

Present researches into the relationship between China's financial development and economic growth are mainly based on the linear framework, however, the related empirical research finds that the traditional Granger causality test can result in flaws due to the neglect of nonlinear relation between variables. Applying the newlydeveloped nonlinear Granger causality test- non parameter T test, an empirical analysis is made on the relationship between China's financial development and economic growth. It is shown that China's economic growth results from the linear Granger of financial development and meanwhile, there is a nonlinear Granger causality from China's financial development to economic growth, which means that the two reflect a two-way causality.