The Theory of Financial Efficiency: A Theoretical Analysis from a Dual Perspective and Empirical Research in China

Author: Shen Jun (Compiler)
Publisher:
Publish Date: 2006-05-01
Features: Financial efficiency is a global topic and a major issue in financial fundamental theory that urgently needs in-depth exploration. This book tentatively establishes a new analytical framework for financial efficiency and conducts empirical analysis on Chinese cases within this framework, deepening and expanding the research on financial efficiency and financial development theory. The book is divided into five parts. Part I is a literature review of financial efficiency research; Part II summarizes the dual perspective for studying financial efficiency from the intrinsic attributes of finance, namely the SFE (Financial Structure—Function—Efficiency) framework for systematic perspective and the evolutionary financial development theory framework for resource perspective; Part III conducts a systematic theoretical analysis of the attributes of financial resources, the meaning of financial efficiency, its classification, allocation framework, influencing factors, and improvement approaches under the dual perspective of system and resources; Part IV proposes an empirical research framework for financial efficiency and conducts an empirical study on Chinese financial efficiency; Part V puts forward preliminary ideas for constructing developmental finance and elaborates on the proposition that China's financial development must take an efficiency-oriented path. Addressing the controversies and areas needing improvement in existing financial efficiency research (especially in macro-financial efficiency research) in terms of research perspectives, conceptual definitions, evaluation systems, influencing factors, and the relationship between financial development and economic growth, this book integrates the theoretical achievements of financial resource theory and systems theory under the dual perspective of system and resources, systematically constructs a complete theoretical and empirical framework for financial efficiency, and conducts empirical research on the Chinese case. Its innovations are as follows: 1. Systematically outlines a new framework for financial efficiency research. The new framework covers five aspects: the theoretical starting point, analytical perspectives, new methodologies, the main lines (threads and weaves) of theoretical analysis, and key points of empirical research. Specifically, it takes financial non-neutrality as the starting point, bases the system view and resource view on the essence of finance as the analytical perspectives, adopts systematic and comprehensive analysis as the new methodology, uses the CAS (Complex Adaptive System) principle of one-time optimization-coordination as the thread, and employs the SEnFEf paradigm (where financial structure, operational mechanisms, and environment jointly determine financial function and efficiency) as the weft. The key points of empirical research are the combination of multi-indicator linear and nonlinear methods with a satisfactory solution. 2. Proposes the dual perspective of system and resources for studying financial efficiency. On the one hand, it constructs the SFE framework, clarifies the position of financial efficiency in the logical chain of the financial system, proposes the SEnFEf new paradigm, new methodologies under systems science, and the concept of financial adaptive efficiency, providing a systematic perspective for in-depth research on financial structure, financial function, and financial efficiency. On the other hand, it proposes that the evolution of financial development theory is an extension of its basic model—the theory of financial deepening—thus breaking the traditional boundary of opposing various schools of financial development theory. On this basis, it uncovers the resource perspective for studying financial efficiency and puts forward preliminary ideas for constructing developmental finance. 3. Derives the three principles of one-time optimization-coordination from the dual perspective and the in-depth analysis of the attributes of financial resources, proposing a new connotation of macro-financial efficiency: the unity of micro-financial efficiency, macro-financial penetration efficiency, and financial adaptive efficiency, which is a more important form of financial efficiency. Inspired by the financial complex system, it systematically organizes the influencing factors of financial efficiency. 4. Through a comparative study of finance and oil, two strategic resources, it further deepens the understanding of the intrinsic attributes of financial resources. Combining endogenous growth theory with the oil seepage model, it proposes financial penetration efficiency. 5. Guided by the three principles of one-time optimization-coordination, it proposes that empirical research on financial efficiency should follow the three principles of multi-indicator linear and nonlinear methods combined with a satisfactory solution. On this basis, it selects reasonable methods and establishes an effective indicator system, developing an evaluation model for financial adaptive efficiency. 6. Under the empirical framework of financial efficiency, it calculates the values of micro, penetration, adaptive, and macro-financial efficiency in China, respectively. On this basis, it uses econometric methods to analyze the influencing factors of Chinese financial efficiency and re-examines the relationship between Chinese financial development and economic growth, drawing many valuable conclusions. Through the empirical study of the Chinese case, the following main conclusions are drawn: , China's financial reform and development should adhere to the principles of systematization, efficiency, and openness; second, financial increment and stock reforms, property rights structure and market structure reforms should be viewed from a coordinated perspective; third, strengthening institutional financial resources and financial infrastructure construction is the core of China's financial development; fourth, optimizing structure, improving operational mechanisms, and enhancing the ecological environment are effective ways to improve financial efficiency. Difficulties and areas for further deepening in financial efficiency research: 1. Difficulties: The understanding of the essence, function, and financial complex system still has limitations, and the theory and methodology of complex systems science are still developing. The difficulty of quantifying key explanatory variables, the incompleteness and inconsistency of data, and other issues lead to relatively rough empirical research. 2. Areas for further deepening: The financial efficiency analysis framework proposed in this book still needs to be expanded with mainstream economic theory models and tested empirically with more samples (countries or regions). The integration of financial efficiency theory and empirical research still needs further improvement.