Research On Spatial Bandwagon And Competition Effects Of The Establishment Of Village Banks In China

The village bank is a new type of rural financial institution in China.Its purpose is to solve the problems of fewer banking outlets,low coverage and insufficient supply of credit funds in many regions.Its establishment is supported and promoted by government forces,market power and economic conditions.This article mainly studies on bandwagon effect and endogenous conditions about village bank establishment from a spatial perspective to provide the decision reference and theoretical basis for financial policy and practice in rural area.Using spatial econometric models and methods,the paper has selected 1875 counties' panel data from 2007 to 2016 to analyze the spatial bandwagon and competitive effect of the establishment of village bank,including head bank,branch bank and both of two types.The first chapter is the theoretical basis for the establishment of village bank,mainly elaborating from the definition and characteristics of village banks,village bank under the perspective of inclusive finance,space and government governance.The second chapter is the research design of this paper,which mainly includes the research hypothesis and the selection of core research variables.The third chapter is the spatial exploratory analysis of the establishment of village bank by using spatial software such as Geoda and ArcGIS to identify and confirm the spatial characteristics of each variable.The fourth chapter explains the data source,selects the Probit model,adds the spatial weight matrix,and uses the measurement software to analyze the spatial bandwagon and competitive effect.The fifth chapter uses the counterfactual inference,replaces the spatial matrix and the economic level indicators to test the robustness of the results.And then I divide the samples into different samples,and further analyze the differences between different regions.Finally,summarize the research conclusions and propose policy recommendations for the above empirical results.It is found that the establishment of China's village banks still presents a “high-high” aggregation pattern in the central and eastern regions,while the western region is a distribution pattern of “low-low” spatial aggregation patterns,indicating that it is necessary to incorporate spatial factors into the analytical framework.The results of the space Probit study show that the establishment of rural banks has significant spatial correlation.The establishment of village bank not only has a spatial bandwagon effect,but also is affected by the economic characteristics of the county itself.The higher level of economic development,the greater government's fiscal decentralization capacity,the higher level of financial development,and the lower degree of regional inter-bank competition,will increase the probability of the establishment of a village bank.The above conclusions apply to the establishment of the head office,branch,and both of two types of the village bank.Therefore,this paper proposes the following policy recommendations: strengthen regional cooperation,promote regional integration;reduce government intervention guide;resource optimization and allocation;eliminate the irrational behavior,such as the bandwagon behavior.