Research On The Flow Of Financial Resourses And Financial Integration In The Yangtze River Delta

Financial integration in the Yangtze River Delta is an integral part of the Yangtze River Delta economic integration.It is generally recognized that the economic integration includes the commodity market integration and the production elements market integration. Europe's economic integration has experienced from the Customs union to the unification currency process,this is between the sovereign state in the monetary policy relative independence,under the exchange rate existence premise achieves. In unified China,under the premise of the central policy's unification,the unificated monetary policy and the unificated tax policy to seek some economic region's integration,the research's method and the way should be different with the international economy integration. Theoretically speaking ,The Yangtze River Delta fiance integration's development research is an unique topic in the regional economies ,because of the financial factor owns its special operating law. This article takes finance as one kind of resources,which becomes a kind of production element,its allocative effects' enhancement is useful to economic growth without doubtlly. The financial resources as kinds of the special element of production is to have its special movement rule. The financial department serve the entity Branches of the economy,the entity economic needs may cause the financial development,it may also the development of financial lead the economic development. The financial resources are under the control of the efficiency maximization on the fund using in the regional flowing .At the same time,under the control of the economy,political environment and the present system's restriction. for instance,local government is in control of financial resources.This paper is based on the reviews of the domestic and foreign literature,combing the fundamental research with the comparative analysis , also using the method of measurement .The paper has carried on system's theory elaboration to the Yangtze River Delta finance integration and has established the analysis frame. The logical system of this paper is these: from the financial resources derived from the financial elements of the free flow which is conducive to the efficiency and economic growth; whether the financial resources are unrestricted flow in the Yangtze River Delta economic region,if not,what is the reason hindered the financial resources free flow. This paper defines the financial resources the unrestricted flow process as the Yangtze River Delta finance integration development process,Because this kind of free flow removes the integrated development obstacles,causes financial essential factors tends to be equal in the region each area,for example,the fund. It also enables the regional microscopic economic subject to obtain the equal treatment no matter what the region status. Because the Yangtze River Delta economic aspect's relation is strengthening inceasingly,it endogenies the financial service which across region , so it is necessary to develop the financial integration. Simultaneously,the regional economic development's disparity of the Yangtze River Delta is not big,so it makes the local government's attitude to the financial integration at most in the same; the three place finance gradient development's in the Yangtze River Delta has had the development request. This article is from the angles on economic growth,industrial division of labor to prove the Yangtze River Delta finance integration's necessity; from transaction cost,economic development level and economic structure's similarity angles and so on proves the feasibility of the Yangtze River Delta finance integration development .Analyzed the distribution and liquidity of financial resources in the area of Yangtze River Delta from a variety of channels,this papper found that the certain differences exist in the distribution of financial resources in Yangtze River Delta. Such differences actually bring up the demand of the development in the whole,because,according to financial resources in the free flow model,if the resources can move freely,the rates of the return of funds tends to be equal,and the utilization of the capital will be increased.Because of the uneven distribution of financial resources in the Yangtze River Delta and the differences in financial development,the development of financial integration is bound to increase the utilization of the resources and promote the growth of the economic. The next is to examine the status of financial integration in Yangtze River Delta,to see whether the financial integration and the economic integration are in the same pace. There are two main methods. First is to see the price of the funds in area of Yangtze River Delta. It is because that the theoretical assumption is that the integration within countries,there are no differences or no big differences in the prices of capital,of course,the funds must be homogeneous,that is,only when the risks are the same,can the prices be compared. Second is to study the trend of the flow of the internal financial resources in the Yangtze River Delta. This passage choose the loans within the banking system as a representative of financial resources,because China's financial system remains to be bank-dominated,and the flow of bank loans can explain most of the flow of financial resources.By comparing the bank credit funds rate in the Yangtze River Delta,the size and price of non-formal financial,as well as the non-performing loan rate of banks,found that the differences in the capital price exist in the Yangtze River Delta,which shows that there is no full integration of the Financial in Yangtze River Delta. By studying the bank loans with the correlation revealed that there are bigger relations between the deposits and loans in the Yangtze River Delta. The local loans lay more dependent on local banks,especially after the tax system reform in 1994,the correlation is greater,indicating that the Yangtze River Delta Financial integration process is not satisfactory. Because our assumption is that if financial markets are more integrated,the relation between the local deposits and local loans is small. In other words,domestic loans can come from other different places. We use the Chow test to prove that the existence of this cut-off point in 1994,the interpretation of the financial non-integrated after 1994 is that,the drop in the financial control of local government leads to the rise in the banking control,which in turn is a result of the current administrative economy. The result of the competition among current local governments is the controlling of financial resources,which leads to the financial division.Research shows the financial integration happening in Yangzi River Delta is not rational. Many causes are responsible for this irrational outcome. One cause besides the local government is the organization system of banks at work.Under the system formulated by the centre bank,which is divided according to great regions,all the banks in Jiangsu province are now leaded by the branching bank in Nanjing,and the Shanghai branching bank takes control of all the banks both in Shanghai and Zhejiang province. This kind of organization is not convenient for the info exchange and communication within the Delta,because this upright organization system has created numerous barriers among the provinces in the delta region,hence stifles the corporation between them. The unbalance of information distribution out of poor cooperative environment results in the inefficiency,compared with the cost of taking part in the financial integration,of the cross-region operation of commercial banks.Since the European countries had made it to form a union in developing economy,it should be much easier to succeed in financial integrating within one country. A integrated financial system may either be formed automatically by the"invisible hand",or the government may initiate policies to eliminate the blocks which are against the integration. In respect of policy suggestions,the author advises that the function of government should mainly focuses on the supply of public goods,rather than too much interference into the market. And this is an essential way to change the situation of unbalanced sources distribution which puts sand in the wheels of financial integration. Besides,a mechanism of information sharing is also indispensible for the success of financial integration. Because the main organizations taking part in the integration are banks,and under a circumstance where the artificial barriers no longer exist,the main difficulty the banks facing in cross-region operation is the unbalance of information allocation. Hence the cooperation among the main interest bodies is necessary,and this calls for a comparatively more effective cooperative system which needs to be formed under the lead of centre government.It is proved that the reality of financial integration is not so good according to the Examination of financial integration of the Yangtze River Delta,and a variety of reasons contributes to this result. Nowadays,it is regarded that the reasons for existing banking management system should be considered in addition to that for local governments. The central bank branches in the system leads to the result that the banks in Jiangsu province are attached to the Nanjing branch,while the bank in Shanghai and Zhejiang province is under the control of the Shanghai Branch. This system has a bad effect on information on the Yangtze River Delta and communication in the Yangtze River Delta. At the same time,the vertical management system of the Commercial banks,which is not conducive to cooperation,makes the inter-provincial barriers become very serious. Considering that most commercial banks participate in the financial integration and analyzing from the point of cost and analysis,the operation in different areas for the Commercial banks has shown its inefficiency due to reasons of asymmetric information.According to the trend that the European countries are still capable of forming an integrated development momentum,the development of financial integration become a relative easy case in a unified nation. When it comes to the development of the financial integration,there is spontaneous formation of the main body of market microstructure with the help of market forces,in addition,it may be promoted by the Government's initiative to break the barriers which are against the development. In terms of policy recommendations,we consider that the fundamental path to break the division of resources between regions impeding the development of financial integration in this passage is to transform the government's functions to a main provider of public goods ,instead of directly intervening in the operation of economy,that is to say,we should let market forces play,and make it the leading factor. It is widely known that in the absence of artificial restrictions the main micro-participation in the financial integration is bank , and information asymmetry leads to the main obstacles in operating between regions. As a result,the sharing of information forms a guarantee of financial integration,and the main stakeholders are playing an important role in this process. take the Yangtze River Delta for example,there is an impending need for the establishment of a relatively effective system of cooperation with the help of the central leadership.