Study On The Difference Of Credit Loan Allocation In Central Cities And Peripheral Cities

The unbalance of regional economic development is a significant problem in the process of china’s development. Since the financing channels including the capital market in present china are limited, a reasonable and appropriate credit loan allocation is important to promoting economic development，otherwise, the uncoordinated loan allocation will increase the gap between regions. In the process of unbalanced development recently, the gap between the central cities shows a convergence trend, while the gap between the peripheral cities is expanding. This performance echoes with the regional development theory:in the early stage of economic development, the polarization effect of growth pole theory dominates and prompts the resources flowing from surrounding areas to central cities, which causes the gap between them wider. At the same time, as the central cities show a higher development speed as they have more advantages of government policies than the peripheral cities. Due to congenital conditions and natural resources constraints, the developed and undeveloped areas in peripheral cities become polarization.This article makes use of the data from southern, middle and northern areas in Jiangsu province, which including thirteen central cities and fifty counties. Besides the static analysis like GDP and deposits per capita, coefficients of variation and Theil index are also used to describe the trend of economic development and credit loan allocation. Then we use Feldstein-Horioka model to prove that inter-regional loan is not active, and deposits and loans are limited in local area. And then by building a panel data model to analyse the factors which affecting the credit loan allocation in different areas, the variables like the level of economic development, economic structure, government action and dependence on foreign trade in central and peripheral cities can be explained. Finally, by reviewing the regional policies of jiangsu province in recent ten years, introduce time dummy to explain the government policy effect:whether or not the regional policy can achieve a balanced loan allocation. The results show that both in central cities and peripheral cities, credit funds allocation are related to local economic development and goverment expenses positively,but the structure of agriculture and dependence on foreign trade affect the allocation differently. Meanwhile, the regional policy carried out by government also affects the trends of credit loan allocation. But the policy can not help government to achieve the optimal credit loan allocation in both central and peripheral cities and sometimes leads to negative effects.Based on the previous analysis, this paper also gives some recommendations and advices about countries and policies in the end. Firstly, as the main subject of putting credit loan into market, the commercial bank should implement special regional credit policy in different areas. Secondly, the peripheral cities can improve the financial environment and foster new economic growing points to enhance the abilities. Finally, according to the different roles between the provincial government and municipal governments, the policies of various administrative levels should be different and some measures should be taken to promote the financial system in the reform process.