Empirical Analysis Of China's Inter Regional Capital Mobility

Since the reform and opening up, along with China's economic system reform, China's economy has got high growth and people's income level has increased greatly. In the meantime, with the development of economy, the problems existing in our economy is emerging gradually. Some scholars believe that the segmentation of the regional capital market is a fatal defect of China's financial system, which largely reduces the using efficiency of the capital and limits the development of China's economy. Based on this problem, this paper intends to have an empirical research on the inter regional capital mobility of China.After having a literature review of the previous studies, we could find that a commonly used method for the international capital mobility research is the saving-investment method (F - H method), meanwhile, this method has been widely used on the inter regional capital mobility research. In addition, the saving coefficient is affected by different factors, such as the economic growth rate, the size of a country, degree of openness, dependency ratios in the population and so on.Using the savings - investment method, I make a study of the FH coefficient change of time on the nationwide first. We can find from the diagram that since the reform and opening up, China's internal regional capital mobility first decreases and then increase, shows an obvious turning point. This phenomenon has a great relationship with the transformation of our economic system and the institutional change.Secondly, the paper make a study of the inter regional capital mobility of China's three regional (the eastern, central and western area) capital flows extent and the scale of capital flows. The empirical results show that the central part of China has the weakest capital flow extent; the eastern and western regions have stronger capital flows degree. According to the statistical data, there is a large-scale of capital run out of the western area and a large-scale of capital inflow to the eastern region. This is mainly because the eastern China has higher levels of economic development. China's eastern coastal areas have good geographical advantages and higher rate of return investment projects and enterprises, which attracted more and more capital.Finally, this paper tests the China's inter regional capital mobility by using panel threshold regression method. The threshold variables being used include the degree of economic growth, degree of openness, the size of a province, extent of marketization and financial development degree. Compared to the previous research, this paper adopted extent of marketization and financial development degree as an innovation. The theoretical and empirical studies have shown that there was negative relationship between the extent of inter regional capital mobility and the degree of economic growth, degree of openness, extent of marketization. The empirical results also indicate that both improvement of province economic scale and financial development degree will increase the capital mobility. We can explain the research results through the historical contrail of China's economic development and this result only applies to the special economic development of China. This article provides an explanation to the relationship between different threshold variables and the FH coefficient. According to the former analyses, some policy suggestions are presented at the end of the paper.