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Web of Proceedings - Francis Academic Press

Research on the Economic Growth Effect and Influencing Factors of Financial Stability

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DOI: 10.25236/icssem.2024.015


Yifei Xu

Corresponding Author

Yifei Xu


The purpose of this study is to explore the influence of financial stability on economic growth and analyze the influencing factors. Through the empirical research on inflation rate, money supply, interest rate level and stock market index, the results show that, firstly, inflation rate has a negative correlation with economic growth, which emphasizes the restrictive effect of inflation on economy. High inflation may lead investors and enterprises to be uncertain about the future economy, thus slowing down economic growth. Secondly, money supply is positively related to economic growth, which shows that moderate money supply has a positive effect on promoting investment and consumption. However, policy makers should pay attention to the potential risks of inflation while maintaining the stability of money supply. There is a negative correlation between interest rate level and economic growth, and high interest rate may restrict the financing of enterprises and individuals, thus inhibiting economic growth. Therefore, it is very important to formulate a reasonable monetary policy and balance the relationship between financing costs and economic growth. Finally, the stock market index is positively correlated with economic growth. A good stock market will help to upgrade borrowing capacity, promote economic activities and create favorable conditions for economic growth. Generally speaking, financial stability has a significant impact on economic growth, but the relationship between different financial factors needs to be balanced in the process of achieving this goal. Policymakers should use monetary policy and supervision flexibly while maintaining financial stability to promote comprehensive and sustainable economic growth.


Economic Growth; Financial stability; Influencing Factors