Research on the Spatial Correlation and Its Influencing Factors of Regional Financial Development in China

Dong Lingxi

（Canvard college,Beijing Technology and Business University，Beijing 101118）

Abstract:Regional finance is the endogenous force of economical development.This paper introduces four theories of regio nal financial development spatial correlation,namely,financial development theory,regional financial theory,spatial economics theory and financial geography theory,and reveals that the formation mechanism of regional financial development spatial correlation is essentially the evolution process of agglomeration-spillover-convergence.This paper also applies social network analysis method and QAP analysis method to analyze the regional financial development spatial correlation of China.Finally,according to the research findings,the paper puts forward suggestions on relevant policies,hoping to promote the balanced and integrated development of regional finance in China.

Key words:Regional finance; Spatial correlation; Influencing factors

Regional financial development underpins the development of national economy,which plays a key role in driving the sustained and stable growth of regional economy.However,at present,there are some problems in the development of regional finance,such as the imbalanced development of regional finances,the unclear positioning of financial functions,the overlapping of regional financial policies and so on,which greatly hinder the coordinated development of regional finance in China.Based on these problems,this paper analyzes the spatial correlation and its influencing factors of China’s regional financial development both at the theoretical and empirical levels,and attempts to find solutions to the problems.

1 The Theory of Spatial Correlation of Regional Financial Development

1.1 Financial development theory

The theoretical research on financial development is originated from Europe in 1960s.After presented a wealth of research findings,scholars reached a consensus on the components of financial system,and regarded financial development as the optimization path of financial structure,including the expansion of financial instruments,expansion of financial scale and increase of financial category.On the basis of referring to the research results of western scholars,domestic scholars have made great progress in this area:According to Zhu Jianfang (2008),the alteration in the relationship between financial institutions and the market will exert an impact on the financial structure,and thereby affect the financial efficiency and financial function,and even determine the degree of financial development; Zhi Dalin (2008) believes that the financial development theory can be seen a sub-theory of currency theory,financial development can be studied from the perspective of currency extension function[1].

1.2 Regional financial theory

The theory of regional finance is a comprehensive financial theory which adapts to China’s national conditions.Zhang Junzhou(1995) puts forward the concept of regional finance.He believed that regional finance is the financial spatial distribution of different forms,levels and aggregation degrees based on the national financial structure.At the same time,Zhang Junzhou proposed that the research focus of regional financial theory is the dynamic changes of the spatial structure of financial development,which requires a comprehensive investigate of the factors such as regional financial spatial differences,development levels and environmental differences,so as to grasp the dynamic promotion effect of multiple influencing factors on financial development; Zhi Dalin (2008) proposed that the regional financial theory puts its focus on the research of regional financial growth and spatial structure.It’s important to grasp the law of spatial distribution of financial resources.

2 The Formation Mechanism of Spatial Correlation of Regional Financial Development

From the perspective of space,the financial development of different regions has a certain correlation,showing the characteristics of regional financial interaction and mutual influence.The formation mechanism of this characteristic is mainly reflected in three aspects:financial agglomeration effect,spillover effect and convergence effect[2].This paper analyzes these three aspects,and then reveals the evolution law of the spatial correlation of regional financial development.

2.1 Agglomeration effect

The effect of regional financial agglomeration is mainly reflected in the effect of financial capital,financial institutions,financial talents and financial information in geographical space,which is a dynamic process of industrial development influenced by various driving forces.Which include:first,scale of economies .The expansion of economic scale of financial products,branches and financial enterprises will promote the deepening development of financial agglomeration and booste the operational efficiency of financial institutions; second,the location advantages.relatively good natural location,economic location and administrative location will attract the inflow of financial resources,coupled with the government’s macro-control and policy support,thus speeding up the construction process of financial agglomeration area; third,the effect of industrial cluster.Regions with advantages in financial cost,market,innovation and talents tend to produce industrial cluster effect and thereby promoting the rapid formation of regional financial agglomeration.

2.2 Spillover effect

When a certain region develops to a certain extent,an economic center will be formed,however,when the agglomeration effect of the economic center reaches its peak,the marginal benefit will decline,which is manifested in the intensified internal competition,increased cost and compressed space for sustainable development of the economic center[3].In this case,financial resources will gradually spread to the surrounding areas,resulting in spatial spillover effect.The driving forces of spillover effect mainly include the following:first,industrial life cycle and industrial transfer,financial institutions and talents flow to the surrounding areas to seek for further development space and for extending the industrial life cycle; second,the mismatch between financial supply and financial demand,which makes it necessary to seek financial demand space in other regions,set up branches in other regions and expand the financial industry.Third,the regional financial environment has undergone major changes,the high cost of living,high degree of market saturation,which all make it difficult to accommodate more financial resources,hence,enterprises can only choose tp spread to the surrounding areas.

3 Empirical Analysis on Spatial Correlation of Regional Financial Development in China

3.1 Analysis method

This paper adopted social network analysis method to study the spatial correlation of regional financial development,which distinguish it from statistical analysis method and data analysis method.It mainly examines the interrelationship between social factors so as to build the spatial correlation network of regional financial development,and visualizes the internal characteristics and laws of the correlation structure,so as to provide theoretical basis for the coordinated development of regional finance[4].

3.2 Selection of indicators

The index selected in this study is the ratio of total financial assets to GDP (referred to as “financial related ratio”) to measure the degree of regional financial development.The research data are collected from Statistical Yearbook of China,Financial Yearbook of China and Financial Statistical Yearbooks of various regions.According to the data statistics,we can draw the following conclusions:①from the national perspective,the financial related ratio indicators of various regions in China from 1984 to 2014 showed an upward trend,indicating that the overall level of China’s regional financial development is constantly upgrading. ② From the perspective of regional scope,there are great differences in the financial correlation ratio among the eastern region,the central region and the western region,among which the financial development levels of the eastern region is the highest,followed by the central region,and the western region is the lowest,with the average financial correlation values of 4.24,1.77 and 1.75 respectively.Among the cities of the eastern region,Beijing and Shanghai are in the top two,with the correlation rates of 7.21 and 5.17 respectively; in the central region,Shanxi,Jilin and Hubei are in the top three,with the correlation rates of 2.28,1.99 and 1.83 respectively; while in the western region,Tibet,Qinghai and Ningxia are in the top three,with the correlation rates of 2.51,2.43 and 2.36 respectively.This demonstrates that there exhibits great imbalance in China’s regional financial development,which indicates that the spatial distribution is highly correlated.

4 Empirical Analysis of the Factors Influencing the Spatial Correlation of Regional Financial Development in China

4.1 Analysis method

In this study,QAP analysis method was used to measure the regression of two types of relational data.In the empirical study of the influencing factors of the spatial correlation of regional financial development,the QAP correlation analysis method employed mainly complete the following two tasks:analyzing the QAP correlation of the relationship matrix and the QAP regression between a relationship matrix and multiple matrices.

4.2 Index selection and model construction

This study selects seven indicators,including per capita GDP,local government fiscal expenditure/GDP,output value of the tertiary industry/GDP,total import and export/GDP,fixed asset investmen/GDP,number of people with bachelor degree or above/population,and residents’ consumption level.The corresponding differences of these indicators are abbreviated as MC,GC,IC,QC,KC,JC,EC,which can reflect the regional financial development,economic bases,government behavior,industrial structure,opening degree to the outside world,per person capital,consumption level and other spatial correlation factors.

5 Conclusion

To sum up,through the theoretical analysis and empirical research on the spatial correlation of China’s regional financial development,it is concluded that there is a general network spatial correlation in China’s regional financial development,and the functional positioning of China’s four regional financial development plates is varied,and there is a close connection between the plates.Through the empirical study on the influencing factors of spatial correlation,it is found that government behavior,industrial structure and economic foundation are the most influencing factors affecting the spatial correlation of regional financial development in China.In view of the fact,China must actively adopt macro-control and policy guidance measures,accelerate the construction of regional financial center,promote regional financial cooperation,optimize local industrial structure,cultivate financial ecological environment,so as to promote the coordinated development of regional finance in China.