Financial Agglomeration and Regional High-Quality Development: Empirical Evidence from a Spatial Durbin Model

Abstract

Using panel data from 31 Chinese provinces for 2006–2022, this study constructs a comprehensive index of regional high-quality development through principal component analysis, measures financial agglomeration using location quotients, and applies the spatial Durbin model (SDM) together with the geographically and temporally weighted regression (GTWR) model to examine the spatial effects of financial agglomeration on high-quality development. The empirical findings are fourfold. First, high-quality development exhibits significant negative spatial autocorrelation, indicating a polarised ‘high–low’ mismatch across regions. Second, financial agglomeration has a statistically significant positive direct effect on high-quality development in the host region. Third, it generates a pronounced positive spatial spillover effect on neighbouring regions, with the radiation effect outweighing the polarisation effect. Fourth, although the total effect remains significantly positive, substantial regional heterogeneity persists: the direct effect is strongest in the western region, the indirect spillover effect dominates in the eastern region, and the central region shows no significant effects, suggesting inefficiencies in local financial intermediation that require further policy attention. Collectively, these findings provide empirical evidence for optimising the spatial allocation of financial resources, promoting coordinated regional development, designing differentiated financial support strategies, and strengthening interregional collaboration during China’s 15th Five-Year Plan period. Specifically, the results support leveraging radiation spillovers in the East, cultivating financial agglomeration in the Central region, and transforming siphoning into mutually beneficial radiation in the West, alongside institutional safeguards for talent mobility and industrial transition to mitigate short-term adjustment costs.