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Financial agglomeration, resource misallocation and urban economic resilience

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Listed:
  • Yin, Jun
  • Kang, Dengyin
  • Wang, Wei

Abstract

Based on panel data from Chinese prefecture-level cities between 2010 and 2022, this study empirically examines the impact mechanism of financial agglomeration investigating urban resilience through the prism of resource allocation. Using a two-way fixed effects model, we find that financial agglomeration significantly enhances urban economic resilience, a conclusion that remains robust across a series of tests. Heterogeneity analysis reveals that this promoting effect is more pronounced in regions with lower financial regulatory intensity, indicating that institutional environments moderate the functioning of financial agglomeration. Mechanism tests demonstrate that resource misallocation plays a partial mediating role, while marketization level significantly strengthens the positive relationship, reflecting how factor mobility and fair competition optimize the allocation of financial resources. This study deepens the understanding of the economic consequences of financial agglomeration, reveals the institutional boundaries through which resource allocation influences economic resilience, and provides a theoretical basis for regional policy formulation.

Suggested Citation

  • Yin, Jun & Kang, Dengyin & Wang, Wei, 2026. "Financial agglomeration, resource misallocation and urban economic resilience," Finance Research Letters, Elsevier, vol. 89(C).
    • Handle: RePEc:eee:finlet:v:89:y:2026:i:c:s1544612325025140
    DOI: 10.1016/j.frl.2025.109265
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    Keywords

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    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • P27 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Performance and Prospects

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