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Sustainability 2016, 8(11), 1116; doi:10.3390/su8111116

Financial Development, Financial Structure, and Macroeconomic Volatility: Evidence from China

1,†,* and 2,†
1
School of Economics and Business Administration, Chongqing University, Chongqing 400030, China
2
School of Public Affairs, Chongqing University, Chongqing 400030, China
These authors contributed equally to this work.
*
Author to whom correspondence should be addressed.
Academic Editor: Marc A. Rosen
Received: 28 July 2016 / Revised: 21 October 2016 / Accepted: 25 October 2016 / Published: 2 November 2016
View Full-Text   |   Download PDF [243 KB, uploaded 2 November 2016]

Abstract

Using annual data from 1997–2014 of 30 provinces, municipalities, and autonomous regions, subdividing trended and cyclical volatility of macroeconomics and inflation, considering different indicators of financial development and financial structure, this paper investigated the impact of financial development and financial structure on macroeconomic volatility. The empirical results found that (1) the trended and cyclical volatility of the previous macroeconomic period had a significantly positive impact on that of the current period, and the impact of trended volatility was greater than that of cyclical volatility; (2) financial development had a significantly negative impact on macroeconomic cyclical volatility through inflation cyclical volatility, but inflation trended volatility would amplify macroeconomic volatility; financial markets have no significant effect on macroeconomic volatility; financial structure measured with the ratio of stock market turnover and the efficiency of the financial development had a significant positive impact on macroeconomic cyclical volatility; and (3) inflation trended volatility had a significantly negative impact on macroeconomic cyclical volatility and trended volatility, while inflation cyclical volatility had a significantly positive impact on macroeconomic cyclical volatility. View Full-Text
Keywords: financial development; financial structure; macroeconomic trended volatility; macroeconomic cyclical volatility financial development; financial structure; macroeconomic trended volatility; macroeconomic cyclical volatility
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Wei, F.; Kong, Y. Financial Development, Financial Structure, and Macroeconomic Volatility: Evidence from China. Sustainability 2016, 8, 1116.

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