A Study On The Effect Of Financial Agglomeration On The Upgrading Of Industrial Structure In Zhejiang

Along with the financial globalization, the agglomeration of the financial industryhas become a phenomenon of modern society which cannot be ignored in the process ofeconomic development. Through agglomeration effect, scale effect and technologicalinnovation effect, it becomes the direct impetus to economic development and industrialstructure transformation. However, besides the rapid economic development in Zhejiangprovince, some problems like the unreasonable industry structure, low level of industrystandard and week technology innovation ability are also exposed. Therefore, in thecritical period of of Zhejiang province as for transformation and upgrading, how to playthe financial agglomeration effect on the upgrading of industrial structure andsustainable economic development has become an important issue.Based on the financial agglomeration and the upgrading of industrial structure, thisarticle discusses the linkage between the financial agglomeration and the upgrading ofindustrial structure in Zhejiang province. Firstly, it combs the related theory of financialagglomeration and industrial structure, analysis the mechanism that how does thefinancial agglomeration affects the upgrading of industrial structure from threeangles-the financial agglomeration effect, the proliferation of agglomeration effect andthe function of finance itself. Secondly, it describes and summarizes the financialagglomeration and the present situation of industrial structure in Zhejiang province,presents quantitative measure towards the financial agglomeration level and theagglomeration efficiency in Zhejiang province, with the using of factor analysis anddata envelopment analysis. Thirdly, it takes the years1993-2012as the sample interval,constructs the cointegration model and the error correction model to develop theempirical analysis on both the main factors of financial agglomeration and the industrialstructureThe results show that the financial agglomeration phenomenon in Zhejiangprovince is highlighted and the financial efficiency achieves a technological level aftersome adjustments. In the long run, financial agglomeration can promote the adjustmentsand the upgrading of industrial structure efficiently, through which the developmentfactors of financial institutions are direct factors, the development of financial industryhelped by financial intermediaries are indirect factors. But in the short term, thefinancial agglomeration refrains the upgrading of industrial structure in a certain degree,which is a cushion for the adjustments of the efficiency of financial agglomeration after the expansion of its scale. Combined with the theoretical analysis and empirical results,this paper put forwards the policy recommendations as to promote the transformation ofindustrial structure in Zhejiang province by deepen the level of financial agglomeration.