The Study Of China’s Regional Financial Innovation

The history of financial development is actually made of steps of financial innovation. As a developing country, China’s financial industry has been growing up from scratch. The trasinsion of from simple deposit and lending business to the complex derivative transactions, from the dominance of state-owned banks to extensively distributed commercial banks, are actually financial innovation and breakthrough. Although some financial innovation imitated western country; these "imported" financial products in China have distinctive economic environment character and improve financial efficiency. From this point of view, it also reflects the innovative nature of the financial industry in China. On the other hand, during the building of Tianjin Binhai New Area, Wenzhou financial reform pilot area and Shanghai Free Trade Area and other regional financial development strategy, as a diversified regional level developing country, China’s inter-provincial levels of financial development and innovation presents regional characteristics. Thus regional financial innovation has grasped the light of theorists and practicer. Based on Bos (2009) for EU countries Measurement of financial innovation, in this paper, we study on China’s regional financial innovation characteristics and internal structure by method of efficiency with2001-2011panel data. This paper made a new interpretation on "regional financial innovation " from Perspective of efficiency.The framework for regional financial innovation in this paper is backed on the theory of financial development, regional financial theory, economic growth theory and spatial economic theory in the area of theoretical research. And in the area of empirical research, we apply the efficiency research methods and spatial econometric research methods, trying to establish a a combination of theoretical and empirical complete system. The frame structure in this paper is from the inside to the outside. With "efficiency evaluation-Environmental Impact-spatial externalities-economic effects" analysis of the main line, we first evaluate the efficiency of China’s regional financial innovation issues; secondly identify the impact of regional financial innovation external environment and find to improve the efficiency of regional financial innovation factors; thirdly mine space spillout of financial innovation and present the relationship of regional financial innovation, financial concentration and financial competition; lastly conclude that regional financial innovation policy means cooperation in order to achieve sustainable development. This paper analyses the economic impact of openning and other environmental factors on regional financial innovation with three-stage DEA method; explores relationship of regional financial innovation and competition, financial innovation and agglomeration area by the use of spatial econometric methods; analyses the relationship between regional financial innovation and economic growth by the introduction of profit maximization in financial intermediaries sector and financial innovation sector; presents proposals of development to promote regional financial innovation from a regional perspective of openness and cooperation. The basic conclusions are as follows:(1) There are differences between the overall level of efficiency of inter-provincial decision units and the frontier, in which the scale efficient is higher than pure technical efficiency, innovation efficiency of financial intermediation is higher than the other two levels of efficiency. From two groups of inter-district level of efficiency comparison, coastal level is higher than the mainland, especially regional financial innovation efficiency level is higher in the Yangtze River, Bohai Bay and the Pearl River. And it is easier to find heterogeneity between regions in accordance with the level of efficiency of financial innovation.(2) the external environment have impacts on the financial sector innovation such as efficiency economic ground, local government intervention, the regional financial markets and the level of opening. Local economic ground easily leads to financial sector workers redundant; Local government intervention on bank lending will lead to inefficient capital investment; establishment of regional financial markets can improve the efficiency of capital investment, but this effect will vary with the policy adjustment effect time is reduced; raise the level of opening up the financial sector can reduce the inefficient use of capital investment.(3) From the persepctive of macro, regional financial innovation has obvious crowding out effect in space, mainly because China’s financial innovation with a regional "pilot" effect leads to competition between the provinces for financial resources; from the perspective of microscopic, the regional financial innovation and financial sector agglomeration exhibit nonlinear characteristics for the role of positive and negative forces from financial industry as Aghion effect and Schumpeter effect exists.(4) Financial innovation only in the district or division of higher financial efficiency can promote economic growth. There is a big gap of technology within the provinces as the frontier tries to enhance regional financial competitiveness. Since the frontier province will reallocate financial resources through regional financial innovation within the regions and elements will to be reassembled, which create a more effective financial resource allocation.The innovation of this paper is reflected in the perspective. This paper extends financial innovation to the regional level. It is in practical significance for economic transition and multi-level country. Secondly, this paper evaluates regional financial innovation efficiency, followed analysis of the impact of environmental factors by Three-stage Data envelopment Analysis. Finally, this paper analyzes special external effects of regional financial innovation by the spatial econometric methods. The study found:regional financial innovation has significant crowding in space due to regional "pilot effect" in the macro aspect; the co-existence of Aghion effects and Schumpeter effects makes nonlinear relationship between regional financial innovation and financial sector Agglomeration in the micro aspect.Correspondingly, it is inevitable that there will be a lot of imperfections from the new point of view of financial innovation. Meanwhile, we try to encompass most of the area of influence factors from connotation, the mechanism to effects of the external environment and other aspects of regional finance innovative ideas though financial innovation, but inevitably there are omissions which that require further research.