Financial Agglomeration And The Impact On Economic Growth In Shanxi Province

Driven by the high liquidity of financial industry and the pursuit of economies of scale offinancial institutions, financial resources have been gathered in a certain area and then itformed financial agglomeration phenomenon. Agglomeration effects they produced play asignificant role in economic growth and had been demonstrated in the relevant studies.However, the results existed a big difference in the selected area, which is mainly associatedwith the development level of regional financial agglomeration. So it is still worthy ofattention and research, especially deep into the micro-regional level. As an energy province,financial industry is developed with a low degree in Shanxi Province, at the same time,regional financial and economic development is not balanced. So it is important for the furtherdevelopment of the financial sector and regional economic growth of Shanxi Province tostudy its status of financial agglomeration and on the impact of economic growth.The main contents of this article: First, it was a comprehensive grasp of financialagglomeration situation in Shanxi Province. In the first part, it conducted a descriptiveanalysis of the status of the financial industry in Shanxi Province. In the second part, thispaper measured and comparative analyzed financial agglomeration level of11cities in ShanxiProvince from2006to2012by location quotient index from the perspective of overall andmajor industry segments of the financial industry. In the last part, this article built an indicatorsystem from four aspects, namely, the overall size of the financial, the scale of the financialsector, financial infrastructure and economies of scale, and then used factor analysis toevaluate and analysis financial agglomeration level of11cities in Shanxi Province in2012.Second, it was the empirical analysis of Shanxi financial agglomeration on the impact ofeconomic growth. This paper selected the data of11cities in Shanxi from2006to2012, andbuilt a panel data econometric model to make empirical test of Shanxi financial agglomerationon the impact size of economic growth. At the same time, it analyzed the differences thatbanking, insurance and the securities industry agglomeration on the impact of economic growth, then analyzed and summarized the causes and problems for the empirical results.The study found that the overall development of financial sector in Shanxi province wasrelatively backward and the cities’ degree of financial agglomeration was low and on thepositive role in promoting economic growth is unlikely. Specifically, location quotient of thedegree of financial agglomeration of Shanxi showed Taiyuan、Yangquan、Datong、Jinchenghad a higher degree of financial agglomeration and the remaining cities were lower than theprovincial average; comprehensive evaluation index system of financial agglomerationshowed Taiyuan and Yangquan had the strongest financial agglomeration, consistent with thelocation quotient results. Further, the empirical results of Shanxi financial agglomerationimpact on economic growth showed that Shanxi financial agglomeration had a positive role inpromoting economic growth in general, but the effect was relatively low. Among the mainsub-sectors the banking agglomeration and the insurance agglomeration had significantpositive effect to economic growth, and securities agglomeration didn’t pass significantly test.The main reason for the empirical results obtained above was that degree of financialagglomeration of all over the city in Shanxi province was overall low. Aiming at thisconclusion this paper analyzed the specific reasons and problem. Finally, this paper raised therelated policy and recommendations against the issues, through strengthen financialcooperation among the cities, and optimize the efficiency of allocation of financial resourcesand financial infrastructure environment to improve the level of Shanxi financialagglomeration development, so as to further promote regional economic growth.