Pattern Evolution and Localization of China's Financial Network Based on Different Types of Banks

Abstract

The branch locations of financial firms have been widely used to construct financial network. China's financial main bodies are represented by banking industry, and commercial banks dominate the banking industry. However, there are some differences in the network characteristics of different types of banks. To extensively study the financial system and the changing trend of financial development in China, this paper explores the spatial pattern and localization of financial network based on different types of banks, including state-owned banks, joint-stock banks, foreign banks, city banks and rural banks. The results show that China's financial development is deeply rooted in the special Chinese economic system. Guided by state regulations and relations, state-owned banks follow the administrative principle to expand and allocate financial resources nationwide. Joint-stock banks follow the market principle to expand. Foreign banks expand in the principle of geographical openness. City banks and rural banks expand in the principle of geographical proximity. By comparisons, the study found that Beijing's primary position is due to the large concentration of state-owned banks, while Shanghai has the most mature financial market system and has more potential to become a financial center with global influence.