A Study On The Impact Of Financial Development For Cross-border RMB Settlement

On April 8,2009,the State Council decided to launch a pilot project of cross-border RMB settlement,which was implemented in Shanghai,Guangzhou,Shenzhen,Zhuhai and Dongguan.In that year,RMB settlement volume of cross-border trade reached 3.58 billion yuan.By the end of 2019,the amount of RMB settlement business in cross-border trade has reached 6.04 trillion,and RMB has become the fifth largest payment currency in the world,with a global market share of 1.94%.The recognition of RMB cross-border payment in the international market has increased significantly.China is gradually promoting the process of RMB internationalization,and cross-border RMB settlement is a key step.At present,China's cross-border RMB business is still in the growth period,it will inevitably develop and mature with the promotion of RMB internationalization,and the settlement scale will also be expanded.However,the growth of cross-border RMB settlement business is inseparable from the support of the financial system.With the expansion of cross-border RMB settlement business to the whole country,it is of certain research significance to select provincial data to explore the impact of financial development on cross-border RMB settlement.In terms of "quantity" and "quality",financial development can be divided into scale and efficiency of financial development,while influence relationship can be divided into direct effect relationship and indirect effect relationship.Meanwhile,indirect effect relationship can be divided into intermediary effect relationship based on different intermediary variables.Therefore,this paper mainly studies the relationship between the direct and intermediary effects of financial development on cross-border people's settlement.At the same time,it can be refined into the direct and intermediary effect relationship between financial development scale and cross-border RMB settlement,and the direct and intermediary effect relationship between financial development efficiency and cross-border RMB settlement.Therefore,the research contents of this paper are as follows:Chapter One is the introduction.This part mainly introduces the research background and significance,determines the research methods,content,research ideas and framework,and expounds the possible innovations and shortcomings of the article.Chapter Two is the theoretical basis and literature review.Firstly,it discusses the theoretical basis of the paper,including the theory of currency competition,the theory of currency selection,the theory of cross-border currency settlement effect and the theory of financial development.It constitutes the theoretical foundation of this paper.Secondly,the author combs the existing research results at home and abroad from six aspects:the currency selection of international trade valuation and settlement;the influencing factors of cross-border RMB settlement;cross-border RMB settlement and RMB internationalization process;financial and economic development&cross-border RMB settlement;linkage effect in offshore market;problems and Countermeasures in cross-border RMB settlement literature review and determine the research direction.Chapter Three is the impact analysis of financial development on cross-border RMB settlement.Firstly,it discusses the development and existing problems of cross-border RMB settlement,including the historical process of cross-border RMB settlement,global ranking of RMB international payment,international market share and offshore market situation.In terms of problems,there are three main problems:the actual imbalance of cross-border RMB settlement,the RMB return mechanism needs to be improved,and the construction of financial infrastructure is not perfect.Secondly,combined with the development situation and the analysis of existing problems,this paper introduces the relationship between financial development and cross-border RMB settlement.Combined with relevant literature and theory,the impact relationship should be divided into direct impact and indirect impact relationship.Indirect relationship refers to the financial development through enhancing national economic strength,promoting the development of real economy,improving product technology level and product differentiation In turn,it has an impact on cross-border RMB.Thirdly,in terms of financial development,we should study it from two aspects:quantity and quality,namely scale and efficiency.At the same time,in the indirect influence relationship,due to the different mediating variables and influence paths,the specific mediating effect relationship should be considered.Therefore,this paper generally includes the direct and intermediary effects of financial development scale on cross-border RMB settlement,and the direct and intermediary effects of financial development efficiency on cross-border RMB settlement.Among them,in the study of direct effect relationship,the scale of financial development should consider the linear influence relationship and "threshold effect" relationship on cross-border RMB settlement;in the research of intermediary effect relationship,the intermediary effect relationship of financial development scale should take industrial structure upgrading and enterprise technological progress as intermediary variables,and the intermediary effect relationship of financial development efficiency should be based on savings rate,the conversion rate of savings and investment,marginal output rate of capital as the mediating variables.Chapter Four is the the impact of financial development scale on cross-border RMB settlement.This part divides the scale of financial development into banking scale,stock market scale and financial agglomeration scale,divides financial agglomeration scale into banking agglomeration scale and securities industry agglomeration scale,and studies their direct and intermediary effects on cross-border RMB settlement.The direct effect empirical results show that:firstly,the scale of financial development can promote the increase of cross-border RMB settlement scale.At the same time,the financial development scale has a"threshold effect" on the cross-border RMB settlement scale.Secondly,the scale of the banking industry can increase the scale of cross-border RMB settlement,but there is a"threshold effect";the scale of the stock market has a positive effect on the scale of cross-border RMB settlement,but there is "optimal scale effect".Thirdly,the scale of financial agglomeration can promote the scale of cross-border RMB settlement,the scale of banking industry and securities industry has a positive impact on the scale of cross-border RMB settlement.The empirical results show that:firstly,the scale of financial development,the scale of banking industry and the scale of stock market can promote cross-border RMB settlement by improving the channels of industrial structure upgrading and technological progress of enterprises;the intermediary effect produced by upgrading industrial structure as an intermediary variable is higher than that of technological progress channel.Secondly,the scale of financial agglomeration can improve cross-border RMB settlement by upgrading industrial structure and technological progress of enterprises.That is to say,there is a mediating effect relationship between the upgrading of industrial structure and technological progress of enterprises.The intermediary effect contribution of industrial structure upgrading channel is higher.Thirdly,there is no intermediary effect relationship between the scale of banking agglomeration,securities industry agglomeration and cross-border RMB settlement scale,which takes industrial structure upgrading and enterprise technological progress as intermediary variables.At the same time,the empirical results also show that the agglomeration scale of banking and securities industry has a positive impact on the technological progress of enterprises,but the impact on the upgrading of industrial structure is not significant.Chapter Five is the impact of financial development efficiency on cross-border RMB settlement.This part still divides the influence relationship into two models:direct and intermediary effect.On the one hand,taking the financial inter-mediation rate as the measurement index,through the fixed effect and random effect models,it verifies that the financial development efficiency has a positive direct effect on the cross-border RMB settlement scale.On the other hand,financial development reflects the ability of financial system to mobilize savings and promote economic growth in three aspects:raising the saving rate,improving the conversion rate of saving investment and increasing the marginal output rate of capital.The empirical results show that:firstly,financial development can improve the scale of cross-border RMB settlement through three channels:inhibiting the savings rate,capital marginal output rate and improving the conversion rate of savings and investment.The channel to enhance the conversion rate of savings and investment to promote cross-border RMB settlement has the best intermediary effect.Secondly,only the conversion rate of savings and investment can improve the scale of cross-border RMB settlement,while the savings rate and marginal yield of capital have a negative impact on cross-border people's settlement.Chapter Six is conclusion and policy recommendations.The first is to summarize the main conclusions of the full text,and the second is to put forward policy suggestions from four aspects of strengthening the construction of financial infrastructure environment,giving play to the effect of financial agglomeration,improving the channel of intermediary effect,and building a multilevel financing system.Based on the above research direction and content,the author summarizes the innovative exploration of this paper as follows:Firstly,it systematically analyzes the impact of financial development on cross-border RMB settlement from two dimensions and four aspects.One dimension is to divide financial development into "quantity" and "quality",that is,scale and efficiency.Another dimension is to divide the influence relationship into direct effect and intermediary effect.In general,it is divided into the direct effect and intermediary effect relationship of financial development scale on cross-border RMB settlement,and the direct effect and intermediary effect relationship of financial development efficiency on cross-border RMB settlement.The scale of financial development is further divided into three levels:the scale of banking industry,the scale of stock market and the scale of financial agglomeration.Secondly,based on the perspective of mediating effect relationship,this paper introduces intermediary variables to study.This paper studies the mediating effect of financial development scale and efficiency on cross-border RMB settlement.On the one hand,taking the upgrading of industrial structure and technological progress of enterprises as mediating variables,this paper explores the mediating effect of financial development scale on cross-border RMB settlement.On the other hand,based on the perspective of mobilizing savings from financial development,this paper studies the mediating effect of financial development efficiency on cross-border RMB settlement by taking savings rate,savings investment conversion rate and capital marginal output rate as intermediary variables.The shortcomings in the article are as follows:One is that the spatial spillover effect of financial development is not considered.This paper empirically tests the direct effect and intermediary effect of financial development scale and financial development efficiency on cross-border RMB settlement,which is through fixed effect and random effect models,and lacks the use of spatial panel model to study the spatial spillover effect.It needs to be further improved in the future research.Secondly,the superposition effect between intermediary variables is not excluded.When we study the relationship between the scale of financial development,including the scale of banking industry,the size of stock market and the scale of financial agglomeration on the intermediary effect of cross-border RMB settlement,the mediating variables used are industrial structure upgrading and enterprise technological progress.However,in this theory,technological progress of enterprises can also promote the upgrading of industrial structure.Therefore,there may be a third intermediary effect relationship,that is,the scale of financial development will first improve the technological progress of enterprises,then the upgrading level of industrial structure,and finally improve the cross-border RMB settlement model.However,this paper does not carry out research on this situation,which will be further discussed in the follow-up study.