Based on the cost efficiency of individual banks, this paper constructs an indicator to clarify Chinese regional banking systems credit allocation efficiency in accordance with the panel data of the provinces and central-government-administered cities of China. When applying this variable into the growth equation and estimating the regression, the results demonstrate a strong positive relationship between the regional banking systems efficiency and regional growth rate. This paper presupposes that the indicator of the banking systems efficiency bears a direct relationship with the banking systems capability of identifying promising entrepreneurs and optimizing credit allocation. Thus, it could be concluded that the banking system can exert their influences on the process of economic growth not only through capital accumulation effects but also through credit allocation effects.
1.1 Introduction
In this section, Banking System Efficiency and Chinese Regional Economic Growth: an Empirical Analysis Based on Bank's Micro-Efficiency is discussed, with relevant and recent citations. As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the aim and objectives of the study. Others are significance of the study, scope of work, research hypothesis and questions, limitation of the study and definition of terms.