E1 Essay Example | Topics and Well Written Essays - 2500 words

E1 - Essay ExampleThe paper elaborates the relationship between the pecuniary organic evolution and the frugal step-up in china with the help of researches that are carried out by many beneficial researchers (Zhang, Lanfang and Susheng, 2012). Allen (2005 cited in Zhang, Lanfang and Susheng, 2012), an eminent researchers has commented that china has been an important example of flourishing economy who have experienced the fast-paced offset in finance in more than 30 years. exactly it should be noted that the pecuniary sector is governed by the utter and is underdeveloped even today. The relationship between pecuniary increment and economic growth is generally negative. With the help of the provincial data between the detail of 1990 to 1999 Boyreau-Debray (2003 cited in Ljungwal and Li, 2007) indentified that financial intermediation has affected the local economic growth negatively. Hasan, Wachtel and Zhou (2009 cited in Ljungwal and Li, 2007) with the help of provin cial data for the period 1986 to 2002 has also pointed out the fact that finance sector has negatively affected the economic growth of the country. But Chen (2006 cited in Ljungwal and Li, 2007) has argued the fact. By using the provincial data for the period of 1985 to 1999 had showed that financial development of China has contributed positively to the growth of the economy (Choong and Chan, 2011). He also examined the two channels, which contributed to the economy to be the substitution of loans for figure appropriation mobilization of savings (Zhang cited in Lanfang and Susheng, 2012). With the help of the provincial data of 1995to 2003, Cheng and Degryse (2007 cited in Zhang, Lanfang and Susheng, 2012) has examined the effect of expansion of the non-bank financial institutions and the banks on the local economic growth. He indentified that the development of the banks has positively affected the economic growth of China. Guariglia and Poncet (2008 cited in Zhang, Lanfang and Susheng, 2012) have used the data of period 1989 to 2003 and has identified two indicators for examining the relationship between economic growth and financial development in China. They concluded that the indicators for measuring the state intervention in financial development are negatively correlated with the economic growth of China. The indicators of market driven financing is positively correlated with the growth of the economy. Finally, Ayyagari, Demirguc-Kunt and Maksimovic (2008 cited in Zhang, Lanfang and Susheng, 2012) took the help of firm related data for examining relationship between growth of the firm and financing pattern of the firm, which can be informal versus formal finance. They explained that the formal financial organization has encouraged the growth of the firms. Park and Sehrt (2001 cited in Zhang, Lanfang and Susheng, 2012) have identified that lending policy by the state banks have not fallen during 1991 to 1997 (Ljungwal and Li, 2007). Thus, it can be sa id that the financial development in China has created both positive and negative impact on the economic growth of China. 2. Chinas financial development and economic growth China has experienced rapid growth in the economy aft(prenominal) the reform in 1978. It has second largest economy in the world after United States and it can die the largest economy in the world in the coming 10 years on the basis of the get Power Parity (PPP) (Allen, J. Qian and M. Qian, 2005). China has always played a significant role in the development o