New evidence for the impact of financial agglomeration on urbanization from a spatial econometrics analysis

Research on the impact of financial agglomeration on urbanization has great significance with regard to the cleaner development of low-carbon cities. Although many empirical studies using geographical weights reveal that financial agglomeration is an important factor in the process of urbanization, few studies have analyzed this process using economic weights. For some fast-growing countries and regions, the urbanization not only means a manifestation of population migration but also a representation of economic growth. Moreover, in areas where the service industry is rapidly developing, the financial industry has fewer geographical constraints, and the characteristics of financial agglomeration reflect this prominent economic spatial correlation. To find new evidence of the impact of financial agglomeration on population urbanization and economic urbanization, this paper considers two factors that affect the spatial autocorrelation between the economy and geography in a spatial econometric analysis, and constructs an economic weight matrix to analyze panel data from 77 cities in China's Yangtze River Economic Belt (YREB). The results show that there are financial agglomeration characteristics in the YREB, and financial agglomeration has a significant positive impact on population urbanization and economic urbanization. The factors such as foreign direct investment, fixed assets investment, industrial development, government expenditure and technology have promoted population urbanization and economic urbanization in the YREB. In the sub-regions, the impact of financial agglomeration on urbanization is different and uneven. Financial agglomeration in the western region has a small positive impact on population urbanization and economic urbanization, whereas financial agglomeration in the eastern and central regions has a greater positive impact on both population urbanization and economic urbanization. Furthermore, robustness tests support the above conclusion. This study provides empirical evidence to support the implementation of financial and urbanization sustainable development goals by policy makers in economically developed regions.