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Financial Functions and Financial Development in China: A Spatial Effect Analysis

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  • Xulan Yu
  • Miao Li
  • Shuting Huang

Abstract

This article aims to study the spatial effect that financial functions have on financial development in China. We use the 2005–2014 panel data for 31 Chinese provinces to construct three spatial panel models of different spatial weight matrixes. The empirical results indicate that there is a spatial competition effect on financial development. Most explanatory variables play positive roles in promoting the local financial development. Spatial spillover effects are not obvious and negative to financial depth. Spatial spillover effects are significantly positive in financial access. Spatial competition effects are observed in financial efficiency. Openness and economic development show spatial spillover effects, while human capital and government subsidies show noticeably spatial competition effects. These insights are valuable to financial department and policy makers.

Suggested Citation

  • Xulan Yu & Miao Li & Shuting Huang, 2017. "Financial Functions and Financial Development in China: A Spatial Effect Analysis," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 53(9), pages 2052-2062, September.
    • Handle: RePEc:mes:emfitr:v:53:y:2017:i:9:p:2052-2062
    DOI: 10.1080/1540496X.2017.1286588
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    Cited by:

    1. Muhammad Asif Khan & Hossam Haddad & Mahmoud Odeh & Ahsanuddin Haider & Mohammed Arshad Khan, 2022. "Institutions, Culture, or Interaction: What Determines the Financial Market Development in Emerging Markets?," Sustainability, MDPI, vol. 14(23), pages 1-23, November.
    2. Pengju Liu & Yitong Zhang & Shengqi Zhou, 2023. "Has Digital Financial Inclusion Narrowed the Urban–Rural Income Gap? A Study of the Spatial Influence Mechanism Based on Data from China," Sustainability, MDPI, vol. 15(4), pages 1-20, February.
    3. Acedański, Jan & Karkowska, Renata, 2022. "Instability spillovers in the banking sector: A spatial econometrics approach," The North American Journal of Economics and Finance, Elsevier, vol. 61(C).
    4. Yuan, Shenguo & Wu, Zhouheng, 2021. "Financial openness and Chinese regional growth imbalance: New insight from spatial spillovers," The North American Journal of Economics and Finance, Elsevier, vol. 57(C).
    5. Khan, Muhammad Asif & Khan, Muhammad Atif & Abdulahi, Mohamued Elyas & Liaqat, Idrees & Shah, Sayyed Sadaqat Hussain, 2019. "Institutional quality and financial development: The United States perspective," Journal of Multinational Financial Management, Elsevier, vol. 49(C), pages 67-80.

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