| Based on labor division theory, this paper demonstrates finance's labor division promotion function from the inner relations among finance development, labor division and economic growth and then establishes a determination model about regional financial development level based on labor division. Then from"three-dimensional perspectives"that are provinces differences perspective,'east, middle and west China'differences perspective and'eight economic regions'differences perspective, this paper fully reveals current situation and causes mechanism of regional financial development differences, further demonstrates and empirically analyzes their change trend and fluctuation law. Further more, basic adjustment and control model of regional financial development differences is established concerning efficiency gap and social risks control. At last, policies recommendations for adjusting and controlling regional financial development differences are suggested.1. Conclusions(1) Economic growth is driven by labor division accelerated by finance, which is the key way for finance to affect economic growth. In the monetary economic system, when commodities exchange and finance transaction are efficient enough, labor division evolution and economic growth can be realized. However, improvement of bank load efficiency has double effect on labor division and economic growth. Under the high efficient commodities exchange, there is a long-term equilibrium among bank load efficiency, labor division level and economic growth. The improvement of bank load efficiency obviously promotes labor division and economic growth; under inefficient commodities exchange, it isn't obvious that finance promotes labor division and economic growth. Because of informal finance, improvement of commodities exchange efficiency doesn't have dual effect on labor division and economic growth. When bank loan efficiency is extremely low, informal finance has a substitution effect on formal finance, and improvement of commodities exchange efficiency is also able to promote labor evolution and economic growth. In the regions with under-developed formal finance, such as Guizhou, Qinghai and Ningxia provinces, informal finance has an important effect on labor division and economic growth.(2)From perspective of labor division, many factors together limit regional financial development, such as commodities exchange efficiency, financial transaction efficiency, productive elasticity coefficient of investment commodities, the average length of education, social welfare levels. Theoretical model shows that financial development level in one region is affected by seven factors that are study cost, productive elasticity coefficient of investment commodities, specialization of investment commodities production, incentives levels for innovation, commodities exchange efficiency, financial transaction efficiency and subjective discount. These seven factors can be categorized into five aspects: commodities exchange efficiency, financial transaction efficiency, productive elasticity coefficient of investment commodities, the average length of education and social welfare levels. Panel unit roots and panel co-integration analysis of regional financial development in China from 1992 to 2004 shows that there are the stable co-integration relationships between financial development levels and social welfare levels, commodities exchange efficiency, financial transaction efficiency, productive elasticity coefficient of investment commodities as well as the average length of education. However, under the"three-dimensional"perspectives, regression coefficient of each variable is obviously different. Each variable's contribution rate to regional financial development differences is different.(3)From 1992 to 2004, China's regional financial development generally appears increase. With reference to adjustable regression equation developed by Zhang Jun, Guanghua Wan and Yu Jin (2007), this paper measures regional financial development level from three-dimensional perspectives that are provinces perspectives, east, middle and west China perspectives as well as eight economic regions perspectives. According to provincial regional financial development level, from 1992 to 2004, China's financial development level generally increases. In 1992, average financial development level of 28 provinces is 0.7246. In 2004, it's 1.0469. According to financial development level of east, middle and west China, from 1992 to 1997, eastern region'financial development level is obviously higher that that of middle region, middle region'financial development level a little higher than that of western region. From 1998 to 2004, eastern regions'financial development level is evidently higher that that of middle regions, western region'financial development level higher than that of middle regions. In 2004, the financial development level of eastern region is 1.1513, western region 0.9832 and middle region 0.8951. According to eight economic regions, coastal region'financial development level is obviously higher than that of other regions. In 2004, southern coastal region's financial development level is 1.2329, rank one, eastern coastal region 1.2260, rank two, middle reaches of Changjiang River 0.6864, rank last. Regarding financial development speed, eastern coastal region ranks first. In 2004, financial development increases 108.73% of that in 1992. The slowest financial development region is northeastern area. In 2004, it just increases 6.15% of that in 1992.(4)From 1978 to 2004, regional financial development differences in China appear"U"characteristic. Since 1992, they appear rising tendency. This paper measures regional financial development differences from provinces, east, middle and west regions as well as eight economic regions perspectives. It finds out that regional financial development differences in China appear"U"characteristic. With regard to provinces, since 1992, China's regional financial development differences appear obvious rising trend. After financial development differences among eastern, middle and western regions as well as eight economic regions are analyzed, cross-region financial development differences are important. From 1992 to 2004, financial development differences among eight economic regions account for 35.78% of the total differences. Financial development differences among east, middle and west regions account for 25.76%. Although the above two have an important effect on the total differences, the inner-region financial development differences of all these regions are still major.(5)From 1992 to 2004, the first important reason causing cross-region financial development difference is different economic geographic conditions and priorities of cross-region national policies. The second important reason is differences of the average length of education. On the basis of regional financial development model and regression equation of labor division theory, with Shapley Value Analysis, this paper analyzes cross-region financial development differences among provinces, east, middle and west regions as well as eight economic regions. Reasons causing regional financial development differences are econometrically analyzed from 1992 to 2004. The study finds out that each factor has different contribution rate but the influence trend of each factor is similar. The chief reason causing cross-region financial development difference is different economic geographic conditions and priorities of cross-region national policies. The second important reason is different years of education received per capita. Meantime, different cross-region commodities exchange efficiency, finance efficiency and social welfare level has evident effect on cross-region financial development difference. However under three-dimensional perspectives contribution rate and ranks are different. It should be mentioned here that due to profound meanings of commodities exchange efficiency and financial transaction efficiency, indicators substituted by this paper may be simple, so that analyzing result may underestimate their contributions to regional financial development differences. But it's disappointing that now there is no better way to measure market exchange efficiency.(6)The change trend of regional financial development difference is similar to the shape of"hat"."U"characteristic just shows characteristics of partial regional financial development differences change from 1978 to 2004 in China, not characteristics of the whole periods. On the basis of regional financial development model,this paper demonstrates convergence mechanism of regional development with these factors that determine financial development, such as education levels received by labor force, social welfare levels, commodities exchange efficiency and financial transaction efficiency and government intervention. The study shows that regional financial development differences may appear four phases. The first phase is direct policy intervention. The second phase is market-oriented divergent period. The third phase is market-oriented identical period. The fourth period is stable period of efficiency differences. Empirical analysis of change trend of regional financial development differences shows that under three-dimensional perspectives, regional financial development appears"U"characteristic, different from"hat"characteristic by theoretic analysis. But according to China's financial system change,"U"just shows characteristics of partial regional financial development differences change, not characteristics of the whole periods.(7)From 1992 to 2004, regional financial development differences appear trend of accelerating expansion. Using methods of residues and Hodrick Prescott filtering method, this paper analyzes Theil index time series of provincial financial development differences from 1992 to 2004. The results show that from 1992 to 204, every one year added, increment rate of Theil index of provincial financial differences will increase about 0.0004, so the regional financial development differences appear accelerating expansion. In the future, regional financial development may also in the phase of divergent period. If there is no policy adjustment and control, in the short time, regional financial development won't be convergent. From 1992 to 2004, regional financial development differences fluctuate. There are two peaks in the figure. One is in 1994 and the other is in 2003. There are 9 years between two peaks. Because there is no more cycle, it's uncertain that the cycle period is 9 years. According to the figure, it's uncertain whether there is stable cycle. Tianlin (2006) measured the cycle period of regional financial development differences and the result is 8 to 9 years. So the result of this paper is close. But cycle change measured by this paper in line with long-term cycle fluctuation is a kind of short-term phenomena.(8)According to trend of regional financial development differences, it's necessary to adjust and control development differences. At present, regional financial development differences in China is in the phase of market-oriented divergent period. They are accelerating expansion. If out of control, they may break through"gyroscopic space", and potential risks of social and economic security will be increased. It's noted that while adjustment and control of regional financial development differences, the differences should be maintained at the point that borderline, possible financial development borderline and efficiency differences line cross, in order to promote the whole level of regional financial development. The methods of adjusting and control regional financial development differences can be top-down or bottom-up. The two methods have their own advantages and disadvantages. The ideal method is to rationally combine two methods above.2. Innovations(1)Reviewing the relationship between labor division and economic growth, this paper develops a financial transaction efficiency model based on labor division to reveal internal logic among financial development, labor division and economic growth. Finance promoting labor division function is proved by theory and empirical analysis. From labor division perspective, the ways and conditions for finance to influence economic growth is revealed and its internal mechanism is deeply identified.(2)Institute analysis paradigm and structure analysis paradigm in financial development theory is broken through, with prominent transaction paradigm and function paradigm analysis in this paper. Financial development model including education and innovation based on labor division is established, which provides a standard analysis structure for understanding determination mechanism of financial development levels and an important basic theory for exploring causes of regional financial development differences, researching its change laws and designing a regional financial adjustment and control mechanism.(3)Based on labor division theory, with Shapley Value Analysis, this paper analyzes financial development differences among regions from'three-dimensional perspectives'of financial development in China, including provinces differences perspective,'east, middle and west China'differences perspective and'eight economic regions'differences perspective. It econometrically reveals mechanism resulting in regional financial development differences. It applies econometrical analysis in causes of regional financial development differences instead of descriptive analysis.(4)On the basis of financial development level determination model, pioneering theoretical study is conducted on convergence mechanism of regional financial development and empirical analysis of characteristics of financial development differences change in this paper. It's demonstrated that the change of regional financial development differences may be shaped like a"hat". At present,"U"characteristic of regional financial development differences in China just shows characteristics of partial market-oriented divergent period, not characteristics of the whole periods.3. Suggestions(1)Finance's labor division promotion function should be fully focused on to reduce regional financial function difference. With the direction of labor division promotion, central government should allocate capital from financial system to these fields that can maximally promote regional labor division, using flexible means of financial adjustment and control. With China undertaking new-style rural construction now, the key ways to increase rural families'incomes and balance rural and urban development are upgrading traditional self-sufficient economy, deepening rural social labor division and enhancing agricultural specialization as well as organization. At present, it's urgent to fully explore rural finance's labor division promotion function, improve running efficiency of rural finance, allocate rural financial capital to upgrade agriculture industries and transfer rural labors. At the same time, it's necessary to rationally lead and regulate informal finance. In the areas with under-developed formal finance, informal finance has substitution effect on formal finance, so it plays an important role to drive labor division and economic growth. Efficiency of informal financial transactions is easily influenced by government attitude on finance control, so government should adopt rational measures to regulate development of informal finance instead of unilateral restriction. Especially in west China and lots of rural areas, informal finance should be recognized and respected.(2)Mechanism for balanced development of regional finance should be established to reduce condition difference for financial development. Firstly, national strategy for financial and economic development should be gradually adjusted, not just developed regions are advanced, but also under-developed regions'development should be kept one eye on. Financial development difference should not exceed"gyroscopic space". Under the conditions of unchanged efficiency of national strategies, priorities of national policies should be given to under-developed regions to speed up development in west and middle China. Secondly, according to national"step by step"development strategy, the focus of development will be gradually shifted on under-developed regions to promote"fair development among different times", dynamically giving different regions equal conditions for financial development. Thirdly, policies coordination for regional financial development should be strengthened to advance regional financial cooperation. Financial back-feeding mechanism for developed regions to under-developed regions should be established. Fourthly, in the process of executing financial policies, financial development differences among regions should be considered when the platform is being established for application of regional financial policies. Adjustment and control mechanism for regional financial policies should be established. Different financial policies should be applied according to different conditions among regions.(3)Reform of education input system should be advanced to reduce differences of education level among regions. Firstly, basic education in the charge of local government in middle and west China should be altered to new input system in the charge of provincial finance bureau. Secondly, education input in middle and west China should be increased continuing and legally. Education input system should be established compatible with public financial system. Education input security system should be enhanced with diverse channels for raising education fund. On the basis of deepening local financial reform, rural education fund input should be gradually brought into government public financial system. Thirdly, social fund should be actively leaded to investing in education. Systems for east regions aiding education in middle and west regions, as well as coastal regions (including northern, eastern and southern coastal regions) aiding education in inland should be established. Fourthly, the relationship between public finance and education input should be identified. Education supported by finance is one of financial innovation and should be promoted, in order to develop finance and education together. Sound interaction mechanism should be established between education development and finance development.(4)Social welfare levels in under-developed regions should be moderately improved and incentives mechanism for innovation should be promoted among regions. Firstly, public finance input in social welfare should be strengthened in underdeveloped regions and social welfare input mechanism should be established legally. Welfare subsidy and facilities provided to workers by labor department should be improved. The disable's life and employment problems should be resolved. Construction of social welfare homes for the old, children, and the mentally ill should be strengthened. Secondly, social welfare's operation system should be upgraded in under-developed regions. Social welfare should be socialized. Diverse levels of social welfare services can be provided, for free or for profit; socialization mechanism for social welfare resources can be established to change singe investment; socialization of social welfare management should be promoted. Social welfare institutes directly managed by government can be altered to social welfare institutes managed by society. Thirdly, incentives mechanism for innovation should be promoted in middle and west China. Venture fund system leaded by government can be established to provide risk subsidy, favorable policies in taxation and to create environment for innovation.(5)Market transaction environment should be optimized among regions to reduce regional differences of conditions for commodities exchange and finance transaction. Firstly, information, communications and transportation conditions should be actively improved in under-developed regions as well as lots of rural areas. In middle and west China, infrastructure input should be ensured, such as transportation and communications. At the same time, modern high technology should be actively introduced to promote capabilities of information, communications and transportation services. Secondly, the legal system should be strengthened in middle and west China to provide a platform for fare and equal commodities and finance market. Thirdly, construction of credit system including basic security level, heteronomous control level and autonomous barrier level should be strengthened in under-developed regions. Fourthly, independent financial subjects should be cultivated to increase their awareness of risks and profit. In addition, conditions for financial transaction and commodities exchange should be improved contemporarily. According to the real situations in under-developed regions, commodities exchange must be promoted firstly to ensure its efficiency above critical point. Then the objectives of adjustment and control can be really realized.
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