Regional Financial Developmet And Trade: Comparative Analysis Between Zhejiang And Jiangsu Provinces

The interaction of regional economic growth and financial development has been one of the recent hot topics, extensive research also has revealed regional trade is one of the key factors of economic growth, from which another good viewpoint can be drawn out that the interaction of regional finance and trade. The relative research around this viewpoint thus has its own theoretical significance. Most of the early papers put the research under national level, while this paper would extend it to the regional perspective. As financial and trade reformation have caused widespread concern currently in China, the research of interaction of regional finance and trade also has its real value.This paper mainly does systematic research around this viewpoint from the following four aspects:Literature Review, Reality Comparison, Mechanism Analysis and Empirical Test, which constitute the overall framework.Literature Review is done from national and regional level, from which we find out that financial development affects foreign trade mainly through promoting capital accumulation and technical progress, and regional difference lies in them. Then Zhejiang and Jiangsu provinces are chosen to make a comparison to testify the above regional difference.After that, this paper systematically classifies the specific mechanism of financial development's influence towards foreign trade from macro and micro aspects and sums up four ways to enforce the influence. As for the empirical test part, financial scale and efficiency indexes, trade scale and structure indexes are made out, and based on the data from Zhejiang and Jiangsu we construct the econometric VAR model to carry out the Johansen Co-integration test, Impulse Response analysis, Variance Decomposition analysis and Granger cause test on the indexes. The results of VAR model on regional data show that the universal mechanism can be extended from national to regional perspective. Specific to the two provinces this paper chooses, there is a long-term equilibrium relationship between finance and trade in both of them, and the scale index of Jiangsu is clearer while a good interaction between the private-owned finance and trade lies in Zhejiang.Finally, based on the above analysis, corresponding policies are recommended from both finance and trade perspectives to constitute to the interactive development of regional financial development and foreign trade.