Mathematical analysis of financial decentralization and economic efficiency in both state-owned and private enterprises

摘要

The relationship between financial decentralization and economic efficiency has been a hot topicin the recent years. Modern enterprises, especially smart manufacturing enterprises, comparedto traditional enterprises, have quantities of distinctive attributes. Given this situation, it is worthyof studying what role the financial decentralization plays in improving economic efficiency ofboth state-owned and private enterprises. In this paper, a mathematical model is built and utilizedto explore the determinants of financial decentralization and the relationship of financialdecentralization and economic efficiency. Specifically, the model is extended from the overlappinggenerations model (OLG), and the first order condition is taken into account to maximizecorporate profits and personal utility and to deduce the channels through which financial decentralizationaffects economic efficiency. Results show that financial decentralization is related tothe size of the population employed by the private economy and it contributes to enhancing economicefficiency by affecting the capital efficiency of private companies and the capital quota ofprivate enterprises. This paper theoretically enriches the literature on the factors of economicefficiency and has significant implications in economic efficiency.