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     Current Research Journal of Economic Theory


Capital Misallocation, Financial Development and Technological Progress in China

Zhang Jiacheng and Shi Zhangming
School of Economics and Management, Hubei Polytechnic University, Huangshi, Hubei 435003, China
Current Research Journal of Economic Theory  2016  1:1-5
http://dx.doi.org/10.19026/crjet.8.3067  |  © The Author(s) 2016
Received: December ‎5, ‎2015  |  Accepted: April ‎5, ‎2016  |  Published: November 20, 2016

Abstract

In order to study the relationship between capital misallocation, financial development and technological progress, we did this research. Dual economy structure in China makes the capital allocation to no profit and the technological progress mostly depends on capital accumulation in modern China. Therefore, capital misallocation can restrict a technical progress in China. Financial development can ameliorate the capital misallocation by improving marketization of capital allocation and stiffening the budget line of state-own enterprises. Taking account of the gap between different areas of China economic development, this study empirically analyzes financial development accelerates the technological progress by ameliorating misallocation of capital utilizing the panel data of 30 provinces from 2005 to 2012 in China. The result reveals that pushing the financial development is a valid path of ameliorating misallocation of capital, accelerating the technological progress, developing the area economy, even the changing of the development of China economy from investment-driving to invention-driving.

Keywords:

Capital misallocation, economic structure, financial development, financial repression, return of equity, total factors productivity,


References


Competing interests

The authors have no competing interests.

Open Access Policy

This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made.

Copyright

The authors have no competing interests.

ISSN (Online):  2042-485X
ISSN (Print):   2042-4841
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