IDEAS home Printed from https://ideas.repec.org/a/bpj/jossai/v2y2014i2p111-129n2.html
   My bibliography  Save this article

A Theoretical Analysis of Financial Agglomeration in China Based on Information Asymmetry

Author

Listed:
  • Che Xinwei

    (School of Business, Renmin University of China, Beijing100872, China)

  • Bu Hui

    (School of Economics and Management, Beihang University, Beijing100191, China)

  • Liu John J.

    (Centre for Transport, Trade and Financial Studies (CTTFS), College of Business, City University of Hong Kong, Hong Kong, China)

Abstract

The development of financial centers can illustrate continuous significance of geography. This paper regards financial services industry as a special kind of industry, and establishes a multi-region model to discuss the formation mechanism and equilibrium of finance agglomeration. Our findings suggest emergence of finance agglomeration depends on opportunity costs caused by information asymmetry, economies of scale, the share of financial services industry in economy and the amount of financial information. The results of numerical examples declare the same conclusions that effects of information asymmetry would push financials firms closer to an information source in order to find and interpret non-standardized information that a financial firm can use to make profit. And the agglomeration of real sector industry will enhance the agglomeration of finance. Finally, this paper puts forward a ratio, related with the opportunity costs, which could be regarded as a measure of whether the central area is an information center.

Suggested Citation

  • Che Xinwei & Bu Hui & Liu John J., 2014. "A Theoretical Analysis of Financial Agglomeration in China Based on Information Asymmetry," Journal of Systems Science and Information, De Gruyter, vol. 2(2), pages 111-129, April.
    • Handle: RePEc:bpj:jossai:v:2:y:2014:i:2:p:111-129:n:2
    DOI: 10.1515/JSSI-2014-0111
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/JSSI-2014-0111
    Download Restriction: no
    File URL: https://libkey.io/10.1515/JSSI-2014-0111?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    2. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    3. Zhao, Simon X.B. & Cai, Jianming & Zhang, Li, 2005. "Asymmetric information as a key determinant for locational choice of MNC headquarters and the development of financial centers: A case for China," China Economic Review, Elsevier, vol. 16(3), pages 308-331.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Masashige Hamano & Pierre M. Picard, 2017. "Extensive and intensive margins and exchange rate regimes," Canadian Journal of Economics, Canadian Economics Association, vol. 50(3), pages 804-837, August.
    2. repec:hal:spmain:info:hdl:2441/6493 is not listed on IDEAS
    3. Redding, Stephen J. & Weinstein, David E., 2016. "A unified approach to estimating demand and welfare," LSE Research Online Documents on Economics 67681, London School of Economics and Political Science, LSE Library.
    4. Thorsten Wichmann, 1996. "The "Information Highway" and the Location of Economic Activity," Berlecon Research Papers 0003, Berlecon Research.
    5. Yang, Yong, 2012. "Agglomeration density and tourism development in China: An empirical research based on dynamic panel data model," Tourism Management, Elsevier, vol. 33(6), pages 1347-1359.
    6. Shin‐kun Peng, 2004. "Spatial Monopoly with Product Differentiation," Southern Economic Journal, John Wiley & Sons, vol. 70(3), pages 646-660, January.
    7. Greenaway, David & Torstensson, Johan, 2000. "Economic Geography, Comparative Advantage and Trade within Industries: Evidence from the OECD," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 15, pages 260-280.
    8. Matthias Firgo & Peter Mayerhofer, 2015. "Wissens-Spillovers und regionale Entwicklung - welche strukturpolitische Ausrichtung optimiert des Wachstum?," Working Paper Reihe der AK Wien - Materialien zu Wirtschaft und Gesellschaft 144, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik.
    9. Picard, Pierre M. & Toulemonde, Eric, 2006. "Firms agglomeration and unions," European Economic Review, Elsevier, vol. 50(3), pages 669-694, April.
    10. Carl Gaigné & Jacques-François Thisse, 2013. "New Economic Geography and the City," Working Papers SMART 13-02, INRAE UMR SMART.
    11. Rosser, J. Jr., 1996. "Development, geography, and economic theory : Paul Krugman (The MIT Press, Cambridge, MA, 1995) pp. iii + 117, index, $20.00," Journal of Economic Behavior & Organization, Elsevier, vol. 31(3), pages 450-454, December.
    12. Baldwin, Richard, 1993. "A Domino Theory of Regionalism," CEPR Discussion Papers 857, C.E.P.R. Discussion Papers.
    13. An-Ming Wang, 2016. "Agglomeration and simplified housing boom," Urban Studies, Urban Studies Journal Limited, vol. 53(5), pages 936-956, April.
    14. BEHRENS, Kristian, 2004. "Market size and urban hierarchy," LIDAM Discussion Papers CORE 2004029, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    15. repec:ebl:ecbull:v:6:y:2008:i:43:p:1-9 is not listed on IDEAS
    16. Mark Thissen & Narisra Limtanakool & Hans Hilbers, 2011. "Road pricing and agglomeration economies: a new methodology to estimate indirect effects applied to the Netherlands," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 47(3), pages 543-567, December.
    17. Toshihiro Atsumi, 2017. "Agglomeration under money illusion," Economics Bulletin, AccessEcon, vol. 37(4), pages 2962-2969.
    18. Dariusz Kotlewski, 2022. "Przesłanki za wykorzystaniem rachunkowości wzrostu gospodarczego w badaniu specjalizacji regionalnych," Ekonomista, Polskie Towarzystwo Ekonomiczne, issue 2, pages 235-258.
    19. Ottaviano, Gianmarco & Thisse, Jacques-François, 1999. "Monopolistic Competition, Multiproduct Firms and Optimum Product Diversity," CEPR Discussion Papers 2151, C.E.P.R. Discussion Papers.
    20. Pierre Philippe Combes & Gilles Duranton & Henry G. Overman, 2005. "Agglomeration and the adjustment of the spatial economy§," Papers in Regional Science, Wiley Blackwell, vol. 84(3), pages 311-349, August.
    21. Alberto Franco Pozzolo, 2004. "Research and Development, Regional Spillovers and the Location of Economic Activities," Manchester School, University of Manchester, vol. 72(4), pages 463-482, July.
    22. Gianmarco I P Ottaviano & Jacques-François Thisse, 2005. "New Economic Geography: What about the N?," Environment and Planning A, , vol. 37(10), pages 1707-1725, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:jossai:v:2:y:2014:i:2:p:111-129:n:2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.