Discussion Paper

No. 2014-6 | February 10, 2014
How Agglomeration in the Financial Services Industry Influences Economic Growth: Evidence from Chinese Cities

Abstract

This paper empirically tests the effect of financial knowledge spillovers on agglomeration in China’s financial services industry and examines the external effects on cities’ economies. The authors apply hierarchical linear modeling to examine a data set that comprises 276 Chinese cities and draw the following conclusions. Firstly, they find that agglomeration in the financial services industry and the Jacobs spillovers of industry diversification both promote financial knowledge spillovers in terms of industry specialization. Secondly, agglomeration in this studied industry has a significant positive influence on a city’s economic growth, while financial knowledge spillovers have a significant but negative effect on a city’s economic growth. Thirdly, the tendency towards agglomeration in the financial services industry in a few major cities is clear and the clustering significantly influences cities’ boundaries. Finally, China’s financial services industry is limited by a serious degree of regulation and is dominated by the main banking institutions.

JEL Classification

G20 O4

Cite As

Lin Liang, Shanglang Lin, and Yong Li (2014). How Agglomeration in the Financial Services Industry Influences Economic Growth: Evidence from Chinese Cities. Economics Discussion Papers, No 2014-6, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2014-6

Assessment



Comments and Questions


Abdul waheed - comment
February 11, 2014 - 09:06

interesting; can be referred


William Albrecht, University of Iowa - reader comments
March 14, 2014 - 10:33

see attached file


Lin Liang, Shanglang Lin, and Yong Li - Reply to reader comments
March 20, 2014 - 09:31

see attached file


Anonymous - Referee report 1
March 20, 2014 - 09:37

see attached file


Anonymous - Referee report 2
March 21, 2014 - 09:04

see attached file


Lin Liang, Shanglang Lin, and Yong Li - Reply to referee reports
March 27, 2014 - 08:30

see attached file