Spatial Econometric Analysis Of Total Factor Productivity Of Financial Industry In China And Influencing Factors

Finance is playing a more important role in modern economy. It is a critical factorto keep the economy stable. In the process of the improvement financial industry systemand the enhancement of financial structure in China， showing the problem ofinsufficient quality in the developing of financial industry. Therefore, it is obvious thatresearch on the total factor producivity (TFP) of China’s financial industry is veryimportant.Two aspects concerning the TFP of China’s financial industry were studied in thisdissertation. Firstly, the regularities of the TFP of China’s financial industry and thecharacteristics of the distribution were reviewed. Secondly, the interaction betweendifferent regional TFP of financial industry was measured using spatial econometricmethod. The magnitudes and properties of major factors’ spatial spill over effect onregional financial system were captured as the parameters in our model. The logic isthat the first part of the study demonstrates regularities of our regional financial TFP inmaero level while the seeond part of the study further explorers the details of regionalinteraction in miero level.The regularities of the TFP of China’s financial industry and the characteristics ofthe distribution were observed from two angles.Firstly, the approach of DEA-Malmquistindex was used to estimate the TFP of China’s financial industry from1998to2012andanalyzed TFP dynamic change. The result showed that: during the period of1998-2012,the TFP of China’s financial industry has a fast growth on the whole, the averagegrowth rate reachs5.7%, the variation trend and technological progress have a highconsistency. The influence of technological progress is deeper than that of technicalefficiency. Further observation, the trend of the TFP of China’s financial industry can bedivided into stages. The first stage is1999-2007，the average growth rate of the TFP ofChina’s financial industry has a growth trend, except for2005. The average annualgrowth rate is3.5%. The second phase is2008-2012, presenting a fluctuating state, theaverage annual growth rate is11.9%. Compared to3.5%of the first phase, the secondphase is more stable. From the regional perspective, the TFP of China’s financial isincreasing from east to west. The eastern region grew by an average of4.6%a year, lessthan5.2%in the central and7.3%in the western. Due to the scale efficiency of eastern region (-0.09%) is lower than central (-0.06%) and western regions (2.13%). Moreover,using the spatial autocorrelation statistics and Moran scatter diagram to further analysisthe spatial distribution characteristics of the TFP of China’s financial industry indifferent province. The result showed that the spatial distribution is not random, but hasa local spatial correlation and volatility, it presents different distribution pattern indifferent years. For example, Shanghai, Jiangsu,Zhejiang, Fujian and some other coastalprovinces have changed from H-H type in1999to L-L type in2012. Finally, localsolient L-L areas are mainly gathered in the eastern coastal provinces, H-H areas aremainly concentrated in the western provinces.All those regularities mentioned above proved that as a complex system, regionalfinancial system has its own stability and evolution law. Hence there must exist dynamicbalance between the interacting elements within the system. In order to learn the detailsof the TFP of China’s financial industry, a spatial econometric model was applied. Theresult showed that: One, the spatial effects on the TFP of China’s financial industry issignificantly. There are Spill-over effects in neighbouring provinces.The marginal effectof spatial spillovers on TFP is more than many traditional factors. Therefore, we shoudstrengthen cooperation to improve efficiency, in the long term development of financialindustry. Two, the degree of opening-up and industrial support have stable andsignificant influence on the TFP, strengthening the explaining power of the model whenconsidering the spatial spillover effect. With the financial reform and industrializationpromoting, it is significant that making full use of opening-up to improve financialefficiency and service quality for realizing the stable development of Chinese economy.Three, over time, the significance and influence degree of factors on the TFP shows arising trend, which is closely linked with the background environment in politics、economy、social culture and technology.