The Empirical Analysis On The Impact Of Financial Development On Industrial Clusters In China

Great many papers affirm that financial development promotes economic growth while economic growth leads to financial services industry progress. Now, more and more people concern to industrial cluster which is taken as one of new initiatives and important activities in the new economic growth in China. The development of industrial clusters depends on external conditions, and asks for specific regional financial services request. It is both theoretical and practical significance important of studying on the Impact of financial development on industrial clusters.Firstly, this paper reviews a large number of domestic and foreign literatures, analyzes and compares them, and makes brief comments on those literatures. Secondly, this paper summarizes the theory of industrial clusters and the theory of financial development. On this basis, this paper uses the method of normative analysis to analyze the impact of financial development on industrial clusters from the perspective of the life cycle of industrial clusters needing funds,the perspective of financial intermediation proactiving financing and the perspective of the formation of new entrepreneurs. Thirdly, on the whole and sub-regional perspective, this paper selects location quotient (LQ) index to measure the development of industrial clusters, and selects financial interrelation ratio (FIR) index to measure financial development by using the general description and comparative analysis methods,and analyze the development of manufacturing clusters and financial development. Fourthly, this paper tests whether there is spatial correlation on the development of manufacturing clusters by introducing the methods-principles of spatial econometrics. According to the test results, fixed effects model between the financial development and industrial clusters is established by using panel data from 1999 to 2008.The results show that there is a virtuous cycle between financial development and industrial clusters; while financial development promotes the formation of industrial clusters and the development of industrial clusters leads to the development of financial services industry. If there are lower funding costs in financial market, the possibility of the formation of new entrepreneurs is higher and the scale of the development of industrial clusters is larger. In recent years, manufacturing industry showed an increasing trend in China. Now, there are many local manufacturing clusters which have comparative advantage. However, there is uneven development in various regions. The level of financial development gradually increased in our country. However, there is uneven development in various regions, large differences in regional development and significant difference of financial development within regions on financial development. There is a significant spatial correlative about the development of manufacturing clusters, while a regional manufacturing industry cluster development affects the development of manufacturing clusters in adjacent areas. financial development helps industrial clusters absorb capital, enhance technical ability﹑learning ability and knowledge systems, reduce costs and risks of innovation, optimize the economic structure of industrial clusters, promote the large-scale development of industrial clusters, enhance the embeddedness about the clusters so as to promote the development of the clusters. Based on the above results, this paper makes relevant policy recommendations, including reducing the differences of regional financial development, establishing a reasonable mechanism of the coordinated development of the regional finance so as to promote the development of the clusters.