The Research On China’s Financial Industry Agglomeration And Influencing Factors

Under the regional economics theory research framework, new economicgeography theory explains that how the homogenous labors and the location choicebehavior of the enterprise affect the formation and development of spatialheterogeneity. New New economic geography theory discusses how the microheterogeneous workers and enterprise heterogeneity affect the formation anddevelopment of the overall economy on the view of heterogeneity and also re-explainthe relationship among industry agglomeration, the flow of factors and thegeographical distribution of economic activities. Finance is not only the endogenousvariable but also the core essential factor of economic development. In those areaswith good conditions, the spatial movement and development of the financial serviceorganizations show the tendency of agglomeration. The developments of mature areasoften take the form of financial industry cluster (group). Some cities even formfinancial Centre. With regard to financial industry agglomeration (center), Chinese andforeign researchers pay more attention to this phenomenon. Related researches arenot working very well on China’s financial industry agglomeration theory andempirical research due to the ignore of the space or heterogeneity and still needs to beexpanded and improved. Spatial econometrics theory states that a certain economicgeography phenomenon or a certain characteristic of a regional spatial unit would beclosely related to a certain economic geography phenomenon or a certain characteristicof the neighborhood space units; almost all the spatial data are spatial dependence andheterogeneity; the underlying assumptions that most classical statistical andeconometric analysis are independent of each other and homogeneous are not valid.Therefore, this paper gives full consideration to the function of the financial industryagglomeration on the view of spatiality and heterogeneity by using spatial econometricmethod to study the influence factors of the financial industry agglomeration in orderto provide more valuable advices for China’s financial sector and agglomerationdevelopment in the future.On the basis of the preliminary discussion and summary，this paper did a lot of researches on the fundamental theory and related documents about financialagglomeration. Also analyzed the impact mechanism of the financial industryagglomeration on scale economy， location and information flow. Meanwhile, thefoundation and development of financial industry agglomeration effect thedevelopment of scale economy, location and information flow. These factors andfinancial industry agglomeration effect and influence by each other and form cyclingand accumulated relationship. On this basis, summarizes the main influencing factorsfor the development of Chinese financial industry agglomeration as the open-door tothe outside world, industry support, the economy level, human capital, knowledgespillover, urban and rural residents savings, economies scale, city environment andgovernment support. Furthermore, show the possibilities of formation according to thefinancial sector development and agglomeration path, the financial industry’s owncharacteristics. Opening to the outside world is its external power, the economic levelis the necessary condition, professional institutions and human capital are the corepower, geographical situation is the basic condition, government planning and policyare the external driving force, different strategies and structure of financial institutionsare the internal determinants, the demand and supply of financial resources are itsformation basis, financial information hinterland is its gravitational pull, scaleeconomy accelerate the formation, financial industry agglomeration (center) is thesupport for formation, city function expansion is the power factor of evolution andtransfer.According to spatial econometric framework, the main concern of this paper is tobuild the spatial measurement model for industry agglomeration influence factors byusing the Chinese provincial panel data from1992to2010. Also, selects thegeographical spatial weighted matrix (w), considers heterogeneity according to thedifferent level of financial resources in different provinces, verifies the existence offinancial industry agglomeration spatial dependencies, separately estimates the spatiallag model and spatial error model, provides relevant measurement test. First, this papercalculates the financial industry cluster degree for China’s31provinces from1992to2010by using regional office method and carries on the spatial statistical analysis. Theresults show that there are significant global spatial correlation of financial industry in1992,2001,2010and significant local spatial correlation existed in provinces in1992,2001and2010. The provincial distribution pattern of China’s financial industry agglomeration mainly presents the characteristics that the east region is high and westregion is low. According to global Moran’s index scatter plot, the provincial spatialcorrelation model, and I we conclude that there are dependence and heterogeneity thatexisted in geographical spatial distribution for China provincial financial industryagglomeration. In addition, by testing the model in1993,2001,2010, thegoodness-of-fit of R2is maximum in spatial error model, the natural logarithm Log Lis maximum, likelihood ratio values LR is maximum. Yet, red pool informationcriterion AIC and SC Schwartz standards are minimum. Therefore this paper haschosen optimal spatial error model among the three models. Furthermore, selected nineindexes as the influence factors for China’s financial industry agglomeration, such asknowledge spillover, economy development level, human capital, opening to theoutside world and so on. Built the Least squares regression and spatial econometricmodeling by using Arcviews3.3, Geoda0.9.1and other software. Consequently, theempirical analysis to compare the spatial econometric model in1993,2001,2010showsthat China’s financial industry agglomeration has strong spatial dependence amongprovinces and has strong positive spatial spillover effects. Finally, this paper analyzedthe influence factors and changes of China’s financial industry agglomeration on staticand dynamic view separately combined with the development characteristics andcurrent situation of china’s economy and finance in different stages.In addition, this article reviewed and summarized the development process ofChinese financial industry and its main bank industry, securities industry and insuranceindustry. Then, based on the data availability, analyzed the current status and trend ofChina’s financial industry agglomeration by the level of region, province, city andindustry since the reform and opening. Currently, the tendency of financial industryagglomeration is obvious, agglomeration degree increase annually, most agglomerationconcentrated in the eastern coastal provinces. The fact is that concentrationphenomenon is obvious in the four major economic zone but with differentcharacteristics. The concentration phenomenon is obvious in those provinces that haveregional core cities or large population. And, financial sector development increasesrapidly in those provinces that have powerful economic growth force. The financedevelopment level has improved in those provinces that are outside the four majoreconomic zones. However, the expansion role of the eastern coastal industry are notfully played, the financial industry agglomeration situation need to be strengthened in the western region and all the regional development presented unbalance situation.The differences of economic basis, economic development model, regional capitalformation, accumulation ability, population scale, the implementation degree ofregional economic integration, the government support policy and the liquidity offinancial resources effected and caused the differences of China’s financial industrydevelopment and agglomeration.In summary, based on above mentioned theories and empirical analysis, this paperconcludes that Chinese provinces should strengthen regional financial cooperationamong adjacent province areas, reduce the financial communication disorders.Moreover, provide policy advices for future development: setup the financial strategiessupports with the help of national economic development power; build a harmoniousfinancial market system by guiding the financial resources flow freely; reasonablyoptimize financial partition layout and financial polarization diffusion effect; Create aprovincial financial interaction mechanism, implement different regional developmentmode.