Measuring China's urban digital finance

Gaoke Liao; Zhenghui Li; Mengxin Wang; Khaldoon Albitar; Gaoke Liao; Zhenghui Li; Mengxin Wang; Khaldoon Albitar

doi:10.3934/QFE.2022017

Quantitative Finance and Economics

2022, Volume 6, Issue 3: 385-404. doi: 10.3934/QFE.2022017

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Research article

Measuring China's urban digital finance

1.
Guangzhou Institute of International Finance, Guangzhou University, Guangzhou, China
2.
Portsmouth Business School, University of Portsmouth, Portsmouth, United Kingdom

Received: 01 June 2022 Revised: 10 June 2022 Accepted: 22 June 2022 Published: 28 June 2022
JEL Codes: G20, G10, O16

With the full integration of digital information technology and financial services, digital finance has developed rapidly. As there are significant differences in the development level of FinTech and traditional financial sectors in different cities, it is important to evaluate the development level of urban digital finance. This study aimed to compile an index of urban digital finance to present an accurate and in-depth depiction of how urban digital finance has developed in China. Our sample covers 278 cities in China, over the period 2010–2020. This paper firstly constructs the urban digital financial index system from the three dimensions of digital financial services, digital financial technology, and digital financial operating environment, and then adopts a combination of subjective and objective methods to measure the urban digital financial index. This paper study revealed that China's urban digital finance has been on an upward trend from 2010 to 2020, and the digital finance operating environment is an important driving force for the growth of the urban digital finance index. The convergence of China's urban digital finance is decreasing, indicating that the gap in digital financial development between cities is increasing. Urban digital finance has positive spatial agglomeration, but this spatial agglomeration is decreasing.
- city,
- digital finance,
- index compilation,
- development,
- spatial
Citation: Gaoke Liao, Zhenghui Li, Mengxin Wang, Khaldoon Albitar. Measuring China's urban digital finance[J]. Quantitative Finance and Economics, 2022, 6(3): 385-404. doi: 10.3934/QFE.2022017

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Abstract

With the full integration of digital information technology and financial services, digital finance has developed rapidly. As there are significant differences in the development level of FinTech and traditional financial sectors in different cities, it is important to evaluate the development level of urban digital finance. This study aimed to compile an index of urban digital finance to present an accurate and in-depth depiction of how urban digital finance has developed in China. Our sample covers 278 cities in China, over the period 2010–2020. This paper firstly constructs the urban digital financial index system from the three dimensions of digital financial services, digital financial technology, and digital financial operating environment, and then adopts a combination of subjective and objective methods to measure the urban digital financial index. This paper study revealed that China's urban digital finance has been on an upward trend from 2010 to 2020, and the digital finance operating environment is an important driving force for the growth of the urban digital finance index. The convergence of China's urban digital finance is decreasing, indicating that the gap in digital financial development between cities is increasing. Urban digital finance has positive spatial agglomeration, but this spatial agglomeration is decreasing.

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