THE IMPACT OF FINANCIAL AGGLOMERATION ON REGIONAL FINANCIAL RESILIENCE IN CHINA: AN EMPIRICAL TEST BASED ON PROVINCIAL PANEL DATA

Abstract

Based on panel data of 30 Chinese provinces from 2015 to 2024, this study measures financial agglomeration using the location quotient method and constructs a composite index of regional financial resilience via the entropy method across three dimensions—resistance and recovery, adaptation and adjustment, and innovation and transformation. A two-way fixed effects model is employed to empirically examine the impact of financial agglomeration on regional financial resilience and its regional heterogeneity. The results show that: (1) Financial agglomeration exerts a significantly positive effect on regional financial resilience; a one-unit increase in the agglomeration level is associated with a 0.021-unit increase in resilience. (2) This effect exhibits significant regional heterogeneity: the eastern region experiences the strongest promotional effect (coefficient = 0.051), whereas the central and western regions show negative and insignificant effects. The siphon effect is identified as the core mechanism explaining why the central and western regions fail to benefit from financial agglomeration. (3) The core conclusions remain robust after excluding exceptional years, adding control variables, and employing instrumental variable approaches. Accordingly, policy recommendations are proposed for optimizing the spatial layout of finance, implementing differentiated regional financial policies, and deepening the integration of industry and finance.