CHEN Changshi，etc：Financial Market Reform and Regional Inequalities: Dominated by Scale or Efficiency?

Abstract：As financial market reform path gradually get clear recently, how the financial market reform affects regional inequalities is becoming a major concern.In this paper, we decompose the effect of financial market reform on regional inequalities into “scale” effect and “efficiency” effect, and find that the key to the effect of financial market reform on regional inequalities is whether it is dominated by “scale” effect or “efficiency” effect.Based on the center-periphery model, we re-explain Kuznets curve hypothesis and propose theoretical assumptions from the perspective of financial market reform.At last, based on the new measure of regional inequalities and decomposition and using panel data from 1997 to 2009, we empirically test theoretical hypotheses.The result shows that financial market reform enforces regional inequalities, because “scale” effect plays a dominated role during the sample period.The effect of financial market reform on eastern regional inequalities is not significant, but it aggravates regional inequalities in the central and west region.

Key words： Financial Market Reform    Center-Periphery Model    Regional Inequality    Spatial Decomposition

source:Finance & Trade Economics ,No.11,2015