Research On Determinants Of Loan-to-Deposit Ratio Among Prefecture-level Cities In Six Provinces In Central China

Raising enough capital is crucial for regional economic development. The regional Loan-to-deposit(LTD) ratio is an index for Chinese local governments,especially the governments of central provinces, to measure banking support for local economy. Many prefecture-level cities have issued special policies to improve local LTD ratio. Therefore, the study of determinants of differences in LTD ratios is of great importance.This paper analyzed the determinants of regional LTD ratio of prefecture-level cities in six central provinces with theoretical research and practical analysis. First,it reviewed previous research results of home and abroad, summarized and analyzed the similarities and differences among them. Second, this paper introduced some theories about the determinants of regional LTD ratio. Third, this paper described the present situations of the six central provinces from the aspects of central area,central provinces and central cities of prefecture-level.Based on previous analysis, this paper made a quantitative analysis of the data of 75 prefecture-level cities in the six central provinces from 2009 to 2013. The data of provincial capitals are excluded for their special political and economical status which may lead to deviation. This paper used Ordinary Least Squares(OLS) to obtain a preliminary model. Then, it used stepwise regression, logarithm transformation, modified logarithm transformation and Feasible Generalized Least Squares(FGLS) to refine the model. The results showed that the year-end quantity of employment and the permanent resident population have negative correlation with the regional LTD ratio while the regional GDP per capita and the secondary industry-to-GDP ratio have positive correlated with the LTD ratio.In the end, this paper summarized the influential determinants that make the differences of LTD ratios among prefecture-level cities in the six central provinces,and recommended governmental policy suggestions for enhancing the support from financial institutes to regional economic development.