Research On The Impact Of Digital Finance Development On Domestic Market Integration Based On The Perspective Of Market Segmentation

In recent years,trade protectionism has risen,the momentum of anti globalization has soared,the impact of the COVID-19 has lingered,and the instability and uncertainty of the global economy have significantly increased.In terms of the domestic environment,China is in a period of shifting economic growth,painful structural adjustment,and digestion of early stimulus policies.The task of reform,development,and stability is arduous.In the face of the new environment and new stage of China’s economic development,a new pattern of double cycle development emerged as the times require.On May 14,2020,the central government proposed to "deepen the supply side structural reform,give full play to China’s super large market advantages and domestic demand potential,and build a new development pattern of domestic and international double circulation and mutual promotion".Among them,the concept of dual cycle development should focus on unblocking the domestic economic cycle,but in the process of building a unified national market and unblocking the domestic cycle,it is facing the phenomenon of China’s unique domestic market segmentation.The long-term existence of this phenomenon will not only hinder the free flow of commodities and factors in China,but also weaken the efficiency of market mechanism to optimize resource allocation,and ultimately hinder economic development.A large number of studies have proved that financial development plays an important role in improving economic efficiency,mainly reflected in the improvement of total factor productivity and the optimization and upgrading of industrial structure.As digital technology continues to empower China’s financial industry,digital finance,as a new financial model with both "inclusiveness" and "efficiency",is in the ascendant.Theoretically,Digital finance can mitigate the adverse impact of market segmentation on economic development.Because of this,it is self-evident that it is important to explore the impact of digital financial development on domestic market segmentation,which is also the starting point and foothold of this paper.Firstly,this paper theoretically expounds the impact mechanism of the development of digital finance on domestic market segmentation.In terms of mechanism,first,the development of digital finance will help weaken China’s market segmentation by promoting the improvement of residents’ consumption level and upgrading of consumption structure and promoting the cross regional flow of commodity factors.Second,the development of digital finance can significantly improve the breadth and depth of investment,promote the upgrading of industrial structure,promote the flow of commodity factors between regions,and weaken the degree of domestic market segmentation;In terms of heterogeneity analysis,the prevalence of the digital divide has had an important impact on the weakening effect of market segmentation of digital finance.Specifically,in regions with low digital divide,digital finance development has a strong ability to alleviate market segmentation,and vice versa.Secondly,based on Dagum Gini coefficient decomposition method and kernel density estimation method,this paper analyzes the relative difference and absolute difference between China’s digital financial development and domestic market segmentation,as well as their space-time characteristics.Finally,we use panel data from 29 regions to empirically test the impact of digital financial development on domestic market segmentation.First,through the two-way fixed effect OLS estimation,it is proved that digital finance and its three sub indicators significantly weaken the domestic market segmentation,of which the effect of digital degree is the most obvious,followed by the depth of use and the minimum coverage.In order to exclude endogenous effects,further tests were carried out by adding control variables,using instrumental variables and 2SLS estimation of twoway fixed effects.Second,considering the measurement of key variables and sample error,we used Internet penetration rate to replace the digital financial development indicators of Peking University,marketization level index to replace the market segmentation index,and removed the samples of municipalities directly under the Central Government to conduct robustness tests,and the test results confirmed the above conclusions.Third,through the analysis of the mechanism of consumption and investment,it is found that residents’ consumption level,consumption structure upgrading and industrial structure optimization play an intermediary role in the process of digital finance weakening the domestic market segmentation.Fourthly,through the analysis of the heterogeneity of digital divide and geographical location,it is found that the positive effect of digital finance is more biased towards provinces and cities with lower digital divide and eastern regions.Fifth,through further analysis,it is found that the mismatch between the level of financial supervision and the development of digital finance will inhibit the weakening effect of market segmentation in China,but the regulatory dividend will be gradually released as time goes by.