Open Access Journal Article

How does Financial Development Affect Regional Economic Growth in China? A Mediating Role of Industrial Structure Optimization

by Tao Zhu a ,  Yu Liu a,*  and  Jingru Chen b
a
School of Economics, Henan University, Kaifeng, China
b
School of Economics, University of Bristol, Bristol, UK
*
Author to whom correspondence should be addressed.
REA  2023, 12; 2(2), 12; https://doi.org/10.58567/rea02020002
Received: 26 March 2023 / Accepted: 25 May 2023 / Published Online: 22 August 2023
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Abstract

Financial development and industrial structure optimization are two-wheeled engines for promoting high-quality development, but the causal identification of the two is still poorly understood. This paper addresses this research gap by comprehensively analyzing the relationship between them. Regional economic growth is a necessary condition for achieving high-quality development. Taking China as an example, this study empirically examines the role of financial development and industrial structure optimization in high-quality development using the entropy method, fixed effects, mediation effects and instrumental variable regression. The study results show that (i) financial development has actively promoted regional economic growth. (ii) The driving effect on the central and western regions is greater than that on the eastern region. (iii) There are differences in the mediating effect of industrial structure optimization and rationalization between different levels of financial development and economic growth. (iv) In addition, the mediating effect of industrial structure optimization is larger in the eastern region than in the central and western regions. (v) The mediating effect of industrial structure rationalization is not obvious in the eastern region, but has a masking effect in the central and western regions. Our findings provide new strategies for financial development and industrial structure optimization in developing countries.

Keywords: Financial development; Industrial structure; Economic growth; Entropy method; Intermediary effect;
Copyright: © 2023 by Zhu, Liu and Chen. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

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ACS Style
Zhu, T.; Liu, Y.; Chen, J. How does Financial Development Affect Regional Economic Growth in China? A Mediating Role of Industrial Structure Optimization. Review of Economic Assessment, 2023, 2, 12. https://doi.org/10.58567/rea02020002
AMA Style
Zhu T, Liu Y, Chen J. How does Financial Development Affect Regional Economic Growth in China? A Mediating Role of Industrial Structure Optimization. Review of Economic Assessment; 2023, 2(2):12. https://doi.org/10.58567/rea02020002
Chicago/Turabian Style
Zhu, Tao; Liu, Yu; Chen, Jingru 2023. "How does Financial Development Affect Regional Economic Growth in China? A Mediating Role of Industrial Structure Optimization" Review of Economic Assessment 2, no.2:12. https://doi.org/10.58567/rea02020002
APA style
Zhu, T., Liu, Y., & Chen, J. (2023). How does Financial Development Affect Regional Economic Growth in China? A Mediating Role of Industrial Structure Optimization. Review of Economic Assessment, 2(2), 12. https://doi.org/10.58567/rea02020002

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