THE RELATIONSHIP BETWEEN FINANCIAL AGGLOMERATION AND ECONOMIC DEVELOPMENT: THE CASE OF THE FIVE PROVINCES IN NORTHWEST CHINA

Abstract

Finance is the general hub of modern market economy operation and plays a non-substitutable important position in economic progress. The fact of financial agglomeration in promoting the economy has been confirmed in the southeastern coastal areas of China, but for the inland areas of the northwest, there is still little research for this "new topic", this field of research is still waiting for people to explore. This paper firstly combs the relevant theories of financial agglomeration. On this basis, the five provinces that constitute the northwestern region of China are selected as the research areas. The total amount of financial agglomeration is set as the main explanatory variable, and the GDP growth rate is chosen to be the main explained variable, then we collected and established the panel data for 2008 to 2017. By processing and testing the data, this paper constructs a fixed-effect model for analysis. The results show that the development of financial agglomeration can promote economic development. For every percentage increase in the total financial agglomeration, the growth rate of GDP will increase by 3.19%, and the impact of financial agglomeration on economic development is lagging.