Financial Development and Total Factor Productivity Growth: Evidence from China

Jian Han (First Author), Yanzhi Shen (Participant Author)

Research output: Contribution to journalJournal


In this article, we estimate the effect of China’s regional financial development on total factor productivity (TFP) growth using large provincial panel data for the years 1990 to 2009. Using the nonparametric stochastic frontier data envelopment approach, we analyze how financial development is related to efficiency improvement and technological progress, the two components of TFP. The study shows that Chinese financial development plays a significant role in promoting TFP growth via technological progress rather than efficiency change. The faster the financial development takes place, the better it could correct the mismatch of resource allocation, thus promoting TFP growth. The results imply that China needs to both further optimize the allocation of financial resources and perfect the regional financial system.
Original languageEnglish
Pages (from-to)s261-s274
JournalEmerging Markets Finance and Trade
Issue number1
Publication statusPublished - 2015

Corresponding author email


  • TFP growth
  • financial development
  • financial institutions

Indexed by

  • ABDC-B
  • Scopus
  • SSCI


Dive into the research topics of 'Financial Development and Total Factor Productivity Growth: Evidence from China'. Together they form a unique fingerprint.

Cite this