金融学院知识库

After the outbreak of the global financial crisis in 2008, the global economy plunged into a downturn. To address this crisis, countries worldwide adopted expansionary policies to alleviate the pressures of economic recession. China also followed suit and initiated the "leverage" strategy, which facilitated rapid economic growth. However, this approach has resulted in excessive leverage that ultimately hampers economic progress. Therefore, conducting an in-depth examination of the correlation between financial leverage ratio and economic growth not only aids in preventing and resolving risks but also offers crucial insights for regulating economic development. Furthermore, although China's financial system has achieved certain accomplishments in promoting economic growth, there are still underlying issues that need to be addressed. While an increase in overall capital significantly impacts economic activity, relying solely on capital accumulation cannot fully meet modern economic development's demand for high-quality financial services. Enhancing financial efficiency – specifically how capital resources are allocated and utilized more effectively – serves as a vital criterion for assessing the maturity of a financial system. Financial efficiency is manifested through institutions' service capabilities, risk management levels, depth and breadth of financial markets, innovation within financial products, and effectiveness of regulatory oversight. Only when the financial system accurately caters to resource allocation needs within the real economy by reducing information asymmetry and transaction costs while improving capital turnover rates can it better serve actual industries and promote sustainable and healthy national economic development.

This paper examines the relationship between the financial leverage ratio, economic growth, and financial efficiency. Firstly, it provides a comprehensive overview of the theoretical foundations that explain how the financial leverage ratio impacts economic growth. Additionally, this paper introduces the concept of financial efficiency along with its measurement index and elucidates on how it influences the dynamic relationship between the financial leverage ratio and economic growth. Secondly, an analysis is conducted on the historical trends of China's overall financial leverage ratio and economic growth over the past 20 years, as well as variations among different provinces and cities. By utilizing dynamic panel data from 2009 to 2021 for 300 prefecture-level cities in China, combined with regional GDP growth rates and per capita GDP growth rates, an empirical study reveals changes in China's economic growth and financial leverage ratio. The core model establishing a relationship between the financial leverage ratio and economic growth utilizes system GMM estimation method while incorporating financial efficiency as a regulatory variable within its framework. The results demonstrate a clear "inverted U-shaped" relationship between the financial leverage ratio and economic growth. Furthermore, it is discovered that financial efficiency has a significant adjustment effect by making this curve more gradual in shape while shifting its inflection point to the right. When the financial leverage ratio is low, financial efficiency significantly promotes positive impacts on economic growth resulting from increased leveraging. Conversely, when high levels of leveraging are present, improved levels of financial efficiency effectively mitigate negative impacts on economic growth caused by excessive leveraging. Finally, based on theoretical analysis and empirical results, this paper puts forward suggestions on improving the leverage early warning mechanism, differentiated leverage regulation, improving the efficiency of financial resource allocation, and improving the suitability of finance and economic growth.