Summary:
Since the reform and opening up, China's economy has made remarkable achievements, but it also faces problems such as gradually widening unbalanced development gap and insufficient coordination of regions. It has been widely recognized that the gap is affected by the allocation of financial resources and the regional coordinated development cannot do without the support of financial resources, which come from domestic commercial and fiscal financing, foreign investment and other funds in China. According to the neoclassical theory, the profit-seeking nature of capital will drive funds to flow to regions with high return on capital. However, the international capital flow does not always follow this model, so the famous “Lucas paradox” appears. Then what factors drive the inter-regional capital flow in China？ The theory of efficient allocation of resources indicates that under the same risk level, the profit-seeking and risk-avoiding characteristics of capital will prompt capital to flow to enterprises, industries and sections with high capital efficiency, while under the same capital efficiency level, it will drive capital to flow to those with low risks. This paper studies the driving factors of regional capital agglomeration considering both capital return and property rights protection, and accurately measures the degree of regional capital agglomeration according to the sources of capitals in China, which is practically important to realize the efficient market-oriented allocation of production factors, build a high-quality land spatial layout and promote regional coordinated development. This paper constructs the capital agglomeration index based on the sources of capital, including bank loan, securities market financing, central project investment, transfer payment and foreign investment. By analyzing and counting the capital situation among provinces in China from 1985 to 2017, it is found that the inter-regional capital flows have changed greatly with the capital difference between the eastern and western regions gradually narrowed. As far as the source structure of funds is concerned, central projects and transfer payments are the main sources in the central and western regions, while loans and securities market financing in the eastern regions. Using the Fixed Effect model (FE) and the Instrumental Variable method (IV) of panel fixed effect to estimate the parameters, we find that there is a non-linear relationship between capital and return on capital, with U-shape in the eastern region and inverted U-shape in the non-eastern region, and a critical value condition for the occurrence of profit-seeking behavior of capital. The statistics of the critical value show that the returns on capital of most provinces in the eastern regions are on the right side of the lowest point, while those in the non-eastern region are on the right side of the highest point, indicating strong profit-seeking for the eastern capitals and weak for non-eastern capitals because of a high proportion of transfer payment in the central and western capitals. More capital is gathered in areas with good contracting institution while the property institution does not significantly promote capital agglomeration. The regional heterogeneity of the relationship between capital and property rights implies that the eastern region should pay attention to improving property rights institution, while the western region should focus on the improvement of contracting institution, so as to create a "wind vane" to attract capitals. However, it must be realized that the higher rate of return on capital and the strong profit-seeking nature of capitals in the eastern region will drive the further flow of funds from the west to the east, which will widen the economic development gap in the long run. A large flow of funds to the east will aggravate the excessive financialization and cause funds to be diverted out of the real economy in the east,while serious financing constraints due to lack of funds will directly hinder western economic development. The local government should promote the reform of property right institution and the market allocation of factors according to the local actual situation, control the rate of return on capital within a certain range to absorb long-term stable financial support and make a better combination of efficient market and promising government for coordinated development of regions in China.
曹廷求, 张翠燕. 资本回报、产权保护与区域资金集聚[J]. 金融研究, 2021, 488(2): 75-93.
CAO Tingqiu, ZHANG Cuiyan. Capital Return, Property Rights Protection and Regional Fund Agglomeration. Journal of Financial Research, 2021, 488(2): 75-93.
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