Measures And Analysis Of Regional Financial Unbalanced Development In China

As the key component of modern economic system, the financial system plays a vital role in regional economic development. The unbalanced regional development in financial systems undermines the coherent development of the nation. It is then both theoretically and practically important for us to develop a scientific measurement on such unbalnancedness and to investigate relevant causes.Using financial geography as the method, this paper discloses the main characteristics of the regional inconsistency in China's financial system. Starting with the regional characteristics and mobility of financial assets, we compared the spatial difference and temporal dynamics of the regional financial system in eastern, central, and western China.First, we construct an index system to measure the financial development, using indices in overall financial performance, structure of the financial system and contribution rate. Using factor analysis and hierarchical clustering analysis, we measure the regional inconsistency in financial development using both cross-sectional and time series data. The result suggests significant spatial difference, with the eleven provinces on the east coast exhibiting more advanced financial development. The result also reveals a characteristic temporal pattern: The gap between eastern and western China was reduced before 2002, but enlarged after that; the gap between eastern and central China is widened consistently over time; and the gap between the central and western China is reduced over time, especially after 1999.Secondly, we analyze the determinants for regional financial development using the financial resource hierarchy theory. The analysis suggests a few factors that contribute to the unbalanced financial development in China, including regional economy development, marketlization, per capita GDP, preference on financial assets, geographic factors, financial policy, average credit records, inter-region cooperation.Finally, based on the analysis and the spatial interactive mechanism in financial geography, we put forward policy targets to reduce such inconsistency. The targets include maintaining a moderate gap in financial development, financial cooperation, and improving the regional financial environment. According to these targets, we give several policy suggestions, which include improving the economic environment in central area and west area, adjusting the regional financial policy, constructing regional financial center, promoting regional financial cooperation, improving regional financial credit environment.