Intra-Provincial Financial Disparity, Economic Disparity, and Regional Development in China: Evidence from Prefecture-Level City Data

Ke Zou and Jing He

Emerging Markets Finance and Trade, 2018, vol. 54, issue 13, 3064-3080

Abstract: The uneven spatial distribution of economic and financial activities in China has long been a concern of both researchers and policy makers. While most previous research focuses on China’s regional disparities measured using provincial data, this article investigates intra-provincial disparities which reflect the dispersion among cities within a given province. Using data on 282 prefecture-level cities in 25 provinces from 2003 to 2012, the relationship between economic disparity and financial disparity is investigated, after which the effects of the intra-provincial disparities on provincial economic growth are examined. It is found that intra-provincial financial disparity and economic disparity are positively correlated. The results also show that intra-provincial economic disparity has no effect on provincial economic growth. The intra-provincial financial disparity, however, has a negative effect on the local economic growth rate. Therefore, developing financial inclusion and narrowing financial disparity are important measures to maintain sustainable and inclusive economic growth.

Date: 2018
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DOI: 10.1080/1540496X.2017.1364236

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