Regional Financial Development Research Articles

Financial Mechanism for Sustainable Development of the Marine Economy with Respect to Technology, Digitalization, and Low Carbonization

This study explores the impact of regional financial development on the sustainable growth of the marine economy across 14 coastal cities in Guangdong Province from 2004 to 2022. To assess this, a comprehensive index system was developed to measure marine economic sustainability, incorporating key factors such as capital investment, production efficiency, and processing and trade. The findings indicate that financial development significantly enhances the sustainable growth of the marine economy. However, the interaction between financial development, technology digitalization, and low-carbon initiatives leads to diminishing returns in terms of sustainability. Through the use of the Moran index and the spatial Durbin model, the analysis reveals a dual outcome: while financial development positively influences a city’s marine economic sustainability, it exerts negative spillover effects on neighboring cities. Previous studies have primarily focused on the relationship between financial development and the marine economy at the national or provincial level, leaving a gap in understanding these dynamics at the city level. Furthermore, the coordination between financial development and marine economic sustainability across cities within the same region remains largely unexplored. This study addresses these gaps by investigating city-level dynamics and examining intercity coordination between financial development and marine economic growth. The results offer a novel perspective for policymakers, highlighting strategies to balance regional financing for the marine economy with targeted investments in science, technology, digitalization, and low-carbon initiatives. This approach seeks to optimize resource allocation and mitigate potential substitution effects. Ultimately, this research contributes to a more nuanced understanding of the complex interplay between financial development and the marine economy at both city and regional levels.

Collateral Monetary Policy, Regional Financial Development, and Nonfi nancial Firms' Shadow Banking Activities

AbstractThe disparity in credit access between large firms and small and medium‐sized enterprises contributes to the prevalence of shadow banking activities, where large, nonfinancial firms with high credit ratings have become new financial intermediaries. These activities vary geographically and are affected significantly by collateral monetary policy. This paper examines the effect of collateral monetary policy, its reform, and regional financial development characteristics on large firms' shadow banking activities, with a focus on the medium‐term lending facility (MLF), the primary collateral monetary policy instrument in China. The results indicate that the MLF encouraged large firms' shadow banking activity. However, the MLF reform in 2018 mitigated this effect by broadening the range of acceptable collateral. Regional financial development, such as a higher number of bank branches around firms, facilitated large firms' shadow banking activities and amplified the MLF's stimulating effect. In contrast, regional advancements in digital finance and market development limited both shadow banking activities and MLF's impact.

Does green finance reform hit urban employment? — Evidence from China's green finance pilot policy

This study aimed to examine the impact of China's Green Finance Reform and Innovation Pilot Zone policy on urban employment trends. The policy was used as a quasi-natural experiment to understand its influence on the average annual employment dynamics across Chinese cities from 2013 to 2022. We employed a staggered Difference-in-Differences (DID) model to examine the policy's effect on urban employment carefully. Our findings indicate that the green finance pilot policy stimulated employment growth at the city level. Subsequently, we discuss the contrasting firm-level effects. Interestingly, the green finance pilot policy has a negative impact on firm-level employment growth. Moreover, the influence varies significantly depending on regional financial development, corporate factor intensity, and ownership structures. This difference between city-level and firm-level outcomes is due to labor shifting from firms with high environmental and social risks to those with lower risks and reallocating labor from secondary to tertiary industries. These findings suggest that green finance reforms have nuanced effects on employment. While they may dampen growth at the firm level, they could foster growth at the city level. Our study provides empirical insights that could help refine the green finance pilot policy and optimize urban industrial structures.

Impact Analysis of the Influence of Institutional Capacity and the Use of Performance-Based Budgeting on Original Regional Revenue Receipts in the Tanggerang Regency Area

This study aims to analyze the impact of institutional capacity and the use of performance-based budgeting on local revenue (PAD) in the Tangerang Regency area. This research uses a quantitative descriptive analysis method using secondary data obtained from various trusted sources. This research identifies institutional capacity, which includes aspects of human resources, institutional systems, and managerial capacity, and analyzes the implementation of performance-based budgeting to increase PAD revenues. The results of the analysis show that strong institutional capacity significantly contributes to increasing PAD revenues. Apart from that, the use of performance-based budgeting has also been proven to have a positive impact on PAD revenues. The implication of this research is the importance of increasing institutional capacity and implementing performance-based budgeting effectively as a strategy to increase PAD revenues in Tangerang Regency. This study makes an important contribution in the context of regional financial development and public financial management, as well as providing a basis for more effective policymaking in increasing regional income.

The loss of political connections and the fluctuation of corporate stock prices: Moderating effect based on media attention

This article examines the impact and mechanism of political connections on stock price fluctuations after the resignation of independent directors with “official” status, based on the exogenous influence of Document No. 18 of the Central Organization Department. Using panel data of A-share listed companies on the Shanghai and Shenzhen stock markets from 2012 to 2020, the experimental group and control group for political affiliation deficiency events were determined through propensity score matching (PSM), and a quasi natural experiment was constructed using differences in differences (DID) for empirical research. By examining the relationship between regional financial development, lack of political connections, and stock price fluctuations, we found that regions with higher levels of financial development are more prone to stock price fluctuations due to the lack of political connections, which is related to higher levels of debt financing in regions with higher levels of financial development. In addition, the increasing level of debt exacerbates conflicts and inconsistencies among stakeholders, which is not conducive to the stability of the company's stock price. Through the above research, relevant suggestions have been provided to enterprises, media, and governments. For example, enterprises should clarify the boundary between government and enterprise, focus on long-term strategic goals, build core competitiveness, and thereby enhance their own value; The media should play a correct role in information transmission and public opinion guidance, and play a positive role in the economic development of the industry; The government should promote market-oriented construction and establish positive government enterprise relationships.

Executive team risk appetite, financial development and re-innovation strategy after enterprise innovation failure: evidence from China

PurposeThis article empirically tests the impact of risk appetite of the executive team on the re-innovation strategy after technological innovation failure using a panel regression model from the perspective of regional financial development level of enterprises.Design/methodology/approachBy means of time series global principal component analysis and panel regression model method, the study validated and analyzed the impact of risk appetite of the executive team on the re-innovation strategy after enterprise technological innovation failure.FindingsThe research found that the higher the risk appetite of executive team, the more inclined the enterprise is to choose the “focusing on quantity, ignoring quality” re-innovation strategy after technological innovation failure. The better the financial development level of the region where the enterprise is located, the better it can effectively reduce the re-innovation strategy of “focusing on quantity, ignoring quality” of the enterprise due to the high risk appetite of the executive team.Originality/valueThe findings of this study are helpful in improving the financial development level of the region where the enterprise is located. It can help the executive team of the enterprise to more objectively choose the innovation strategy after technological innovation failure, and reduce the phenomenon that the executive team of the enterprise only pays attention to the quantity of re-innovation and underestimates the quality of re-innovation after technological innovation failure due to its high risk appetite.

The Influence of Work Environment, Work Discipline, and Work Stress on Employee Performance of the Directorate General of Regional Financial Development, Ministry of Home Affairs

Human resource management is included in organizations that focus on human resources. Human resources or human One of a company's most crucial components is its resources, particularly at the Ministry of Home Affairs' Directorate General of Regional Financial Development. The analytical instrument employed was Spss29.0 ver.2023, in this study 40 respondents were used as the study population and the research sample technique used was saturated sampling technique, and questionnaires were used as a data collection tool. From validity test and reliability test. The reliability test results are considered reliable with the Cronbach alpha value r count 0.494 > r table 0.304, and the variables of work environment, work discipline, and work stress are considered valid because the value of r count > r table. The work environment variables of work discipline and work stress have an effect of 30.8% on employee performance, according to the results of the determination test for the R square value, which is 0.308 or 30.8%. The remaining variables are influenced by other variables that were not examined. According to the F test, Fcount (5,339) is greater than Ftable (1.92). Thus, the working environment, work discipline, and work stress all have an impact on employee performance at the same time.

Export Expansion, Demand for External Finance, and Regional Financial Development: Evidence from China

Export Expansion, Demand for External Finance, and Regional Financial Development: Evidence from China

The Effect of Green Credit on Enterprises’ Green Transformation under Sustainable Development: Evidence from Green Innovation in High-Pollution Enterprises in China

How to help enterprises reduce pollution and transform into environmentally friendly enterprises through financial channels is an important issue that needs to be urgently addressed. This study constructs a quasi-natural experiment based on the implementation of the 2012 Green Credit Guidelines and evaluates the impact of green credit policy on green transformation in high-pollution enterprises from the aspect of green innovation. The research results found the following: (1) After the implementation of green credit policy, the quantity and quality of green innovation in high-pollution enterprises have significantly improved. (2) To avoid the inaccuracy of research conclusions caused by differences in sample characteristics, this study used the PSM-DID model to verify the promoting effect of green credit policy on the green transformation of high-pollution enterprises. (3) Furthermore, this study analyzed the impact of differences in the ownership nature of enterprises and regional financial development levels on the green transformation of high-pollution enterprises under green credit policy. The results show that green credit policy has a stronger impact on the green innovation of state-owned high-pollution enterprises and high-pollution enterprises in underdeveloped financial areas. The findings of this study provide an important reference for the reform of green finance of government departments.

Development Level and Growth Source of Chinas Digital Inclusive Finance An Investigation Based on Contribution Decomposition Model

The outbreak of COVID-19 epidemic not only highlights the solid foundation of China's digital economy, but also counterforces and accelerates its further development, which provides a potential opportunity for China's economic transformation and upgrading in the next stage. This paper uses the contribution decomposition model, examines the development level and growth sources of Chinas digital inclusive finance from three dimensions: the coverage, the using depth and the digitalization degree. The research shows that from 2011 to 2020, the overall level and each dimension indexes of digital inclusive finance development show a leap-forward development, but the problem of insufficient and imbalance of regional financial development is still quite obvious. The results of contribution decomposition show that, taking 2016 as the boundary, the growth source of digital inclusive finance index in the former stage lies in the coverage, and the latter stage mainly depends on the coverage and using depth of digital finance, while the emphasis on the digitalization degree of digital finance is relatively insufficient. Under the background of the complex situation and severe challenges in the post-epidemic era, efforts should be made in the top-level design and elements support, aiming at the regional and dimensional shortcomings, so as to make positive contributions to the high-quality development of China's economy.

Financial development, energy consumption, and economic growth in the ASEAN countries: evidence from the PVAR approach.

The Association of Southeast Asian Nations (ASEAN), a new global economic force, has struggled to achieve a dual objective of enhanced economic growth and improved environmental quality. Financial development is generally considered an important tool in achieving these simultaneous objectives. This paper examines the response mechanism and the inter-relationship between the ASEAN region's financial development, energy consumption, and economic growth. Unlike previous studies, the paper uses a generalized method of moments panel vector autoregression (GMM-panel VAR) framework for the 1981-2021 period. The second-generation Granger causality test is used to identify their causality relationship. Economic growth supports financial development and reduces energy consumption from fossil fuel sources in the ASEAN countries. Financial development also reduces fossil fuel energy consumption. The bi-directional relationship between economic growth and fossil fuel energy consumption exists. Energy consumption and financial development are also bi-directionally linked. However, only the unidirectional Granger causality from economic growth to financial development is found. The variance decomposition analysis results confirm that economic growth accounts for the most significant variance in fossil fuel energy consumption and financial development in the ASEAN countries. Policy implications have emerged based on these findings.

Economic openness, financial bias, and the urban–rural income gap

AbstractWe develop a theoretical model to analyze the impact of economic openness and financial bias (i.e., open sector bias and urban area bias) on the urban–rural income gap. Our theoretical model puts forth three propositions, which we empirically test using a dynamic panel data model. We use data from 30 provinces in China spanning from 2004 to 2017 for our empirical analysis. Our results reveal a U‐shaped relationship between the urban–rural income gap and the level of regional economic openness. We also find an inverted U‐shaped relationship between the urban–rural income gap and the open sector bias of regional financial development. Moreover, our analysis indicates a positive relationship between the urban–rural income gap and urban area bias in regional financial development. These three propositions hold true for both nominal and real measures of the income gap.

Extending the frontiers of financial development for sustainability of the MENA states: The roles of resource abundance and institutional quality

AbstractResource abundance characterizes economies within the MENA region from North Africa to the Middle East. As such, to improve financial development (FD) for regional economic sustainability, this study provides a comprehensive analysis of the roles of natural resources abundance and institutional quality indicators on the region's FD while underscoring the inflationary levels and general economic growth trends amidst rising globalization. The adopted empirical strategy (CS‐ARDL and AMG) is employed for potential cross‐sectional dependency (CD) and slope homogeneity in the regional data spanning over two decades (2000–2020). Unlike the extant literature, two separate regional FD indicators were considered for an insightful analysis namely, banking financial services via domestic credit to private sector, and financial stability via the Z‐score values showing the tendencies of default in a country's banking structure. Regardless of the FD indicator, the results reveal that natural resources, growth trends, and inflationary levels significantly spur long‐run regional FD thereby invalidating the financial resource curse hypothesis in the region. Furthermore, both institutional quality levels and globalization produced detrimental impacts on FD levels. However, the interaction between institutional quality levels and natural resources shows a desirable FD‐stimulating effect in the region, noticeably when FD is proxied by the Z‐score. Thus, implying that stronger institutions are crucial for MENA's overall financial stability vis‐à‐vis reduction in the risk of default in the banking system. Hence, policy recommendations including the strengthening of institutional capacities among others, were suggested to regional authorities toward harnessing resources for sustainable regional FD.

Infrastructure Spending and the Regional Financial Development: Evidence from the Eastern African Belt and Road Initiative Countries

This paper examines the causal relationship between infrastructure spending and regional financial development in Eastern Africa, including Ethiopia, Kenya, Tanzania, Rwanda and Uganda, for 2007–2017 within a trivariate vector autoregressive framework. We use the Global Financial Development Database from the World Bank. We extend the conventionally accepted ratio of financial development by including the Belt and Road Initiative (BRI) spending as an additional variable. The empirical strategy involves applying the Granger causality tests using the cointegration and vector error correction methodology. We find evidence of a two-way Granger causality: (1) between the BRI spending and regional financial development and (2) between the BRI spending and regional growth. These findings suggest that an increase in infrastructure spending, particularly in transport, telecommunications and energy, positively affects regional financial development in Eastern Africa and increases the unbanked population’s inclusion in the region.

Financial Flexibility and Investment Efficiency

In recent years, the external financing environment of enterprises has deteriorated, especially since the impact of the COVID-19 epidemic, which has further limited external financing opportunities for enterprises. Therefore, it is imperative to adopt effective financial strategies to promote enterprise growth. This paper examines the influence mechanism of financial flexibility on the investment efficiency of new generation listed companies in the information technology industry from 2017 to 2020. Using the adjustment path analysis method, the paper constructs and verifies the role path of "financial flexibility → investment efficiency" to explore the impact of financial flexibility on investment efficiency and its effect on enterprise growth. The status quo of financial flexibility and investment efficiency of listed companies in the new generation of information technology industry is analyzed descriptively using stata16.0 statistical software. The paper proposes a hypothesis and constructs a multiple linear regression model to examine the influence of financial flexibility on investment efficiency. The empirical results show that the new generation of IT enterprises face challenges such as low capital flexibility and investment efficiency, particularly insufficient investment. Financial flexibility can help enterprises cope with capital demands under uncertain circumstances and improve the efficiency of enterprise investment. Therefore, in the market environment, enterprises should retain financial flexibility while strengthening internal control to improve investment efficiency and meet the needs of enterprise growth. The government and financial sector should promote supply-side structural reform in the financial sector, raise the level of regional financial development, and provide a favorable environment for external financing of strategic emerging industries such as the next-generation information technology industry.

Research on the Impact of New Urbanization on Industrial Transformation and Upgrading

Based on the panel data of 285 prefecture-level cities in China from 2010 to 2020, the policy net effect of the new urbanization strategy on industrial transformation and upgrading is evaluated by using PSM-DID. The research results show that the new urbanization strategy has a significant and sustained positive effect on industrial transformation and upgrading. The mechanism test results show that the new urbanization strategy promotes the industrial transformation and upgrading by influencing the regional financial development.

Credit corruption, financial constraint and corporate innovation: Evidence on China

This paper investigates the casual effects of credit corruption and financial constraints on firms' innovation activities, by using a unique data from the 2012 World Bank micro survey on Chinese firms. The results show that both the credit corruption and financial constraints significantly inhibit corporate innovation, and the financial constraints have more pronounced inhibitory effect on the innovation in firms with credit corruption. In addition, the credit corruption reinforces the inhibitory effect of financial constraints on the innovation in SMEs, private firms, capital-intensive firms, and firms with lower regional financial development.

Research on the Relationship between Cash Holding and Business Credit in the View of Supply Chain

This paper analyzes the relationship between corporate cash holdings and commercial credit from the perspective of supply chain, selects 1162 listed companies from 2017 to 2021 as sample objects, analyzes the impact of corporate commercial credit on cash holdings, and discusses the regulatory role of regional financial development level on this impact. The final result shows that there is a significant positive correlation between business payables, i.e. business credit obtained by enterprises, and cash holdings; There is a significant negative correlation between enterprise receivables, i.e. business credit provided by enterprises, and enterprise cash holdings.

Regional financial development, spatial spillover and capitalization of pig breeding

ABSTRACT Based on the relevant statistical data of 30 Chinese provinces from 2007 to 2020, the spatial spillover effect of the impact of financial development on the capitalization of hog farming was analysed by establishing a spatial Durbin model based on the capitalization of hog farming in China.The results show that the level of regional financial development has a facilitating effect on the capitalization of hog farming.Meanwhile, the results of decomposition effects show that the regional financial development level has a negative spillover effect on capitalized farming of hogs.The reason for this negative externality may be the siphoning effect of the developed financial industry areas on the capital and non-fixed farming factors in the surrounding areas.

Information and communication technologies development and the resource curse

Information and communication technologies (ICTs) influence economic growth, yet, innovation in natural resource development and energy demands is seldom considered. Will the development of ICTs aid in alleviating this natural resource curse? An analysis of time-series data from 30 Chinese provinces confirms this effect, and this finding is especially robust. In particular, some Chinese regions are affected by an abundance of natural resources. Computing, telephone, cellular connections, and incentives for technological collaboration result in greater energy demands and, thus, greater CO2 emissions. In short, ICT growth somewhat alleviates the resource curse. This effect is heterogeneous in terms of the level of regional financial development and the presence of a resource curse in the location. Policymakers seeking to develop long-term, nationwide e-sustainable strategies must then lower natural resource prices and pollution abatement costs through technologically driven natural resource expansion.