Financial development and industrial structure upgrading in Beijing, Tianjin and Hebei region of China

The concept of new development philosophy proposed by China's government in October 2015, has addressed the importance of regional and industrial coordinative development. In this paper, we developed a theoretical model to explore the impact mechanism how financial development influenced on industrial structure upgrading. Financial development may have promotion effect or repression effect on industrial structure upgrading. Based on the theoretical framework, we employed panel data in Beijing, Tianjin and Hebei region of China from 1985 to 2016 to analyze the impact of financial development on industrial structure upgrading. The results indicated structure upgrading in Beijing, Tianjin and Hebei region of China was positive. The financial correlation ratio and financial financing size significantly improved service industry productivity. Meanwhile, the impact of financial efficiency on secondary productivity was negative and the effect on tertiary industry productivity was not significant. However, the overall effect of financial development on industrial productivity was nonlinear, since financial promotion and financial repression began to take effect on industrial structure upgrading. Therefore, more attention should be paid to the usage of repression and promotion effect from financial development. For local government, the externality of regional financial policies also should be taken into consideration when planning and implementing specific policy measures. To improve the mobility of production factors, it was suggested to continuously urge the reform of market economy system to accelerate the adjustment pace of industrial structure upgrading in Beijing, Tianjin and Hebei region of China.

Financial development

Industrial structure upgrading

Financial promotion

Financial repression

Coordinative economic development