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Industrial structure upgrading and the impact of the capital market from 1998 to 2015: A spatial econometric analysis in Chinese regions

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  • Wang, Chao
  • Zhang, Xinyi
  • Vilela, André L.M.
  • Liu, Chao
  • Stanley, H. Eugene

Abstract

Using the theoretical framework of spatial econometrics, we estimate the impact of capital markets, i.e., stock markets, medium-and-long term bond markets, and medium-and-long term loan markets, on industrial structure upgrading (ISU) across 31 provinces in China from 1998 to 2015. We apply an explanatory spatial data analysis (ESDA) to detect the presence of spatial dependence and use a spatial Durbin model (SDM) to examine spatial distribution and spatial association. Although our overall estimation results from the 31 provinces indicate a degree of correlation between capital markets and industrial structure upgrading, the magnitude of spatial spillover effects in three sub-markets on ISU differ. We divide the 31 provinces into four economic zones, and explore the impact of three sub-markets on ISU in the eastern zone, central zone, western zone, and northeastern zone. Using our results, we provide policy suggestions that better facilitate ISU in China.

Suggested Citation

  • Wang, Chao & Zhang, Xinyi & Vilela, André L.M. & Liu, Chao & Stanley, H. Eugene, 2019. "Industrial structure upgrading and the impact of the capital market from 1998 to 2015: A spatial econometric analysis in Chinese regions," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 513(C), pages 189-201.
    • Handle: RePEc:eee:phsmap:v:513:y:2019:i:c:p:189-201
    DOI: 10.1016/j.physa.2018.08.168
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    8. Wang, Chao & Zhang, Xinyi & Ghadimi, Pezhman & Liu, Qian & Lim, Ming K. & Stanley, H. Eugene, 2019. "The impact of regional financial development on economic growth in Beijing–Tianjin–Hebei region: A spatial econometric analysis," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 521(C), pages 635-648.
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