The Spatial Economic Effect of Industrial Credit Misallocation in China

Abstract

The cross-industry allocation of bank credit plays an important role in China’s economic development and optimizing and upgrading industrial structures. This article collects the panel data of 19 industries in China from 2007 to 2017, constructs dynamic spatial panel models, and deeply analyzes the impact of credit misallocation on industry economy. The results show that structural misallocation of bank credit exists in various industries in China. Particularly, credit deviation degree of China’s industries has gradually declined, but structural volatility remains large. A large amount of capital flows to the tertiary industry, while the capital of the primary industry and the secondary industry is relatively scarce. What is more, credit misallocation has a negative impact on industry economic growth and shows a weak acceleration effect. Therefore, in formulating economic policies, the government should actively guide the rational flow of inter industry credit funds and improve the efficiency of capital allocation. The government should continue to increase investment in manufacturing and promote independent innovation. Additionally, reasonable financial policies should be formulated to ensure the effective operation of the market and reduce the degree of credit misallocation.