InternatIonal Journal of IntellIgent technologIes and applIed statIstIcs

Vol.6, no.4 (2013) pp.321-337, DOI: 10.6148/IJITAS.2013.0604.01

Airiti Press

An Analysis on the Causes and the Spatial

Differences of Financial Intermediations Growth in
China
Cangshu Li*
PBC School of Finance, Tsinghua University, Beijing, China

ABSTRACT
Financial intermediation plays an important role in the modern economy. To better promote
the development of financial intermediation, its meaningful to analyze the causes that have
positive effects on finance and study the spatial differences of financial intermediations
growth in China. Based on the time-series data related to economy and finance from 19912011, this paper uses the stepwise regression method to eliminate the multicollinearity, and
draw the conclusion that the value-added of the tertiary industry and per capita annual
disposable income of urban households are promoting the development of financial
intermediation. Besides, this paper makes use of cluster analysis to classify the financial
intermediations development of 31 provincial administrative regions in China. The
government should speed up the development of financial intermediation and further
improve its service function on the real economy, elevate the financial security to the
national strategic level and accelerate the internationalization of finance.
Keywords: Financial intermediation; Causes; Cluster analysis; Spatial differences

1. Introduction
Finance is the all currency and credit activities associated with economy.
Modern economy is a market economy in essence, which is a kind of developed
currency credit or financial economy. Modern economy is that of fundamental role
in the allocation of resources by market mechanism, and finance has a very
important position in setting up and improving the national macroeconomic
regulation and control system. Financial intermediation is connected to all
aspects of the national economy. It can be more in-depth and comprehensive to
reflect the economic activities from tens of thousands of enterprises and
institutions, at the same time, interest rates, exchange rates and financial
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instruments have a direct effect on microeconomic entity. According to the

demand of macroeconomic policy, a nation

* Corresponding author: licangshu@sina.com

322
could adjust the scale, speed and structure the economic development, and
promote the development of economy through the monetary central bank on the
basis of price stability.
In the modern economic life, monetary fund, as the important wealth and
economic resources, becomes the lifeblood and communication medium in the
whole social economic life. Almost all economic activities cannot be apart from the
monetary capital movement in the modern society. By the domestic perspective,
finance is connected to various departments, various industries, each unit of
production and operation, each social member and home, and becomes a national
important lever and means to manage, supervise and regulate the national
economic operation. From the international perspective, finance becomes the ties
for international political economic and cultural exchanges, international trade,
foreign investment and international economic and technological cooperation. The
contribution of the financial intermediation to the national economy is reflected in
both direct and indirect aspects. Direct contributions are embodied of financial
intermediations added value to economic growth. Indirect contribution refers to
the financial intermediation engaging in the production and business operation
activities to drive the development of related industries and increase its value,
but the value is not directly measured by the system of national accounts.
Therefore, the financial intermediation is connected with the economic growth
in a country, and many scholars engaged in the research of the relationship
between economic growth and the development of the financial intermediation.
Wu and He [6] analyzed the relationship between economic development and
financial intermediations growth of Anhui Province by the canonical correlation
analysis. The result shows that the effect of the financial growth on the economic
development is weak, which means that there may be a demand-following
model. Based on the result, they proposed that China should grasp the
opportunity of the development of the tertiary industry in the course of regional

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urbanization and industrialization, strengthen the awareness of energy-saving

and emission reduction, and promote the development of financial reform and
innovation. At the same time, the government should transfer the gross financial
growth towards to the full financial development of finance, and promote the full
play of both aspects Song [4] made a factor analysis by choosing four variables on
behalf of the entity economic development and financial development scale,
finding that there is a main component can be used to represent the spillover
effects of Chinas financial development to economic growth approximately.
Chinas current level of financial development doesnt have a spillover effect on
economic growth, and even brings negative effects after removing the direct effect
of finance. Yao [9] made an empirical test of economic growth effect with theory
framework of new classical economics by using regional macroeconomic data. The
article found that regional differences of informal financial development provide a
sound explanation for regional differences of economic growth. Formal financial
development promotes Chinas economic growth. Under the background
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of financial repression, the importance of informal finance serves as a foil to the
lags behind of formal financial development, or is the development lags behind of
formal financial inducing the development of informal finance. Luo [2] measured
the differences between developed finance and general finance by the theories of
developed and general finance. Based on the indicators measuring relationship
between general finance and economic growth, in combination with the
fundamental path of the impact of developed finance on economic growth, the
paper constructed the indicators to measure the effect intensity on economic
growth by Quark selfregression model. The result shows that there is a
remarkable long-term effect of developed finance on economic growth, and the
effect is much higher than that of general finance. Zhou and Wang [10] studied
the relationship between the finance and economic growth in China in the period
of 1978 to 2000, and found that there is a close relationship between finance and
economic growth in every region of China. They hold that the financial
development will accelerate economic growth and the gap of financial
development could partially cause the economic gap. At low initial level, regional
financial development is against its long-term economic development. It will bring

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positive effect to improve the level of financial development for long-term

economic growth. In financial development index, the correlation of financial
liberalization and economic growth is significant. Open the financial sector can
effectively improve the quality of financial development. China should further
explore the way of financial market in order to achieve sustained, rapid and high
quality financial development and economic growth. Wang and Du [5] made an
empirical analysis on the relationship between rural finance and rural economic
growth through gray correlation method by using the relevant data about rural
finance and rural economic growth in Shaanxi Province. They found that scale
index, structure index, efficiency index of the rural financial development are all
important factors for the rural economic growth, whose effect is different, among
which the effect of efficiency index on rural economic growth is greatest. By
analyzing the results, they put forward the countermeasures and policy
recommendations for developing the rural finance and promoting the rural
economic growth. Li [1] studied the relations between the economic growth and
regional financial development based on the data of financial ratio, degree of
securitization and financial development efficiency from 1996 to 2010 in Chong
Qing. It is concluded that economic growth with related securitization degree,
financial correlated ratio were positively, negatively related with financial
development efficiency respectively.
All the studying achievements above give us so much enlightenment and show
that financial intermediation is closed to the economic growth. It should be paid
attention

to

the

relationship

between

economic

growth

and

financial

intermediation and their causes of growth. To be different from the studying

achievements above, this paper will focus on the causes of financial
intermediations growth and spatial differences of its growth in China. The
structure of the paper is: put forward the
324
problem; analyze the causes of financial intermediations growth; analyze the
spatial differences of financial intermediations growth; at last is the conclusion.

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2. Analyze the causes of the financial intermediations growth

To analyze the causes of financial intermediations growth, we select the
classic multiple regression method. Wu and Sun [7] interpret the construction of
economic models and estimation of parameters and variables in a meaningful
way, which contributes a lot to this paper in the aspect of multiple regression
analysis. Also, Navid et al. [3] study the statistical properties of two component
mixture of Topp
Leone Distribution under a Bayesian approach, which paves the way for this
paper to make further mathematical investigation.
In the macroeconomic theory, the financial intermediation growth should be
influenced mostly by the activities of production and the residents life. The more
amounts of national production, the more amounts of the value-added of financial
intermediation. So we select the value-added of the Financial Intermediation as
the dependent variable to show the growth of the financial intermediation; the
value-added of primary industry, the value-added of the secondary industry, the
value-added of the tertiary industry, the per capita annual disposable income of
urban households and the per capita annual net income of rural households as
the independents to show the economic growth and the raise of the resident
income.
According to this train of thought and explore the China Statistical Yearbook,
the related data are listed below (Table 1).
We will make the classical regression analysis based on the time series data
above. The basic thought of the regression analysis is: if there exist dependent
variable y and independent variables x 1, x2, ..., xp, and there is a linear regression
relationship between y and xp, then the relationship can be described by the
following formula:
yc = b0 + b1x1 + b2x2 + ... + bpxp +
Parameters are calculated by the least square method as follows:

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325
Table 1. Data for causes of financial intermediations growth in China.
Financial
intermediation
(100 million
yuan)
Y

Primary

Secondary

Tertiary

Per capita

(100 million (100 million (100 million

disposable

income of

income of urban

rural

annual

industry industry industry

yuan) yuan) yuan)
X1

X2

households
X3

(yuan) X4

Per capita
annual net

households
(yuan)
X5

1991

1,056.3

5,342.2

9,102.2

1992

1,306.2

5,866.6

11,699.5

1993

1,669.7

6,963.8

1994

2,234.8

1995

7,337.1

1,700.6

708.6

9,357.4

2,026.6

784.0

16,454.4

11,915.7

2,577.4

921.6

9,572.7

22,445.4

16,179.8

3,496.2

1,221.0

2,798.5

12,135.8

28,679.5

19,978.5

4,283.0

1,577.7

1996

3,211.7

14,015.4

33,835.0

23,326.2

4,838.9

1,926.1

1997

3,606.8

14,441.9

37,543.0

26,988.1

5,160.3

2,090.1

1998

3,697.7

14,817.6

39,004.2

30,580.5

5,425.1

2,162.0

1999

3,816.5

14,770.0

41,033.6

33,873.4

5,854.0

2,210.3

2000

4,086.7

14,944.7

45,555.9

38,714.0

6,280.0

2,253.4

2001

4,353.5

15,781.3

49,512.3

44,361.6

6,859.6

2,366.4

2002

4,612.8

16,537.0

53,896.8

49,898.9

7,702.8

2,475.6

2003

4,989.4

17,381.7

62,436.3

56,004.7

8,472.2

2,622.2

2004

5,393.0

21,412.7

73,904.3

64,561.3

9,421.6

2,936.4

2005

6,086.8

22,420.0

87,598.1

74,919.3

10,493.0

3,254.9

2006

8,099.1

24,040.0

103,719.5

885,54.9

2007

12,337.5

28,627.0

125,831.4

111,351.9

13,785.8

4,140.4

2008

14,863.3

33,702.0

149,003.4

131,340.0

15,780.8

4,760.6

2009

17,767.5

35,226.0

157,638.8

148,038.0

17,174.7

5,153.2

2010

20,980.6

40,533.6

187,383.2

173,596.0

19,109.4

5,919.0

2011
24,958.3
47,486.2
220,412.8
Source: China Statistical Yearbook (2012).

204,982.5

11,759.5

21,809.8

3,587.0

6,977.3

Note: Author calculated and processed the data as required.

The solution of equations above is:

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326
Here:

X' is the transposed matrix of X.

Apparently the multiple linear regression model, based on the Table 1, could
be established as following:

In the model above, Y represents the value-added of financial intermediation.

X1, X 2 and X 3 represent the value-added of the primary industry, the secondary
industry and the tertiary industry respectively; X 4, X5 represent per capita
annual disposable income of urban households and per capita annual net income
of rural households respectively.
Using OLS to estimate the equation by software Eviews 5.0 based on the
estimation methods of the linear equation, the results are as follows (Table 2).

Table 2 shows R2 = 0.9931 and R 2 = 0.9910, at the same time, F-statistic is

431.4671, and its corresponding probability is hugely small, so the regression
equation is remarkable on the whole. In this model, n is 21 (n is the sample size)
and k is 5 (k is the number of explanatory variables). Hence, n - k - 1 = 15. Given
the significant level = 0.05, in the t distribution list, the corresponding critical

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value when degrees of freedom = 15 is 2.131. Some of the explanatory variables

cannot pass the t test, and the regression coefficient for some variables is
negative. This shows that there may be multicollinearity among the explanatory
variables.
Compute the correlation coefficient to verify the multicollinearity among
explanatory variables (Table 3).
Table 3 shows that the correlation coefficient between the explanatory
variables is very high, so we adopt the stepwise regression method to construct
the model for eliminating the multicollinearity among the explanatory variables.
Stepwise regression analysis is short of regression analysis for screening step
by step, and it is a statistical method of solution about how to choose an
important variable in establishing regression equation and determine its
mathematical expression of variables introduced. Its basic idea is: the
independent variables (the explanatory variables ) is introduced one by one
according to the order of size of the
327
Table 2. Results of estimation.
Dependent variable: Y
Method: Least squares
Date: 10/04/13 Time: 09:42
Sample: 1991 ~ 2011
Included observations: 21
Variable
C

665.8187

Std. error
765.8045

t-Statistic

Prob.

0.869437

0.3983

X1

0.486226

0.295519

1.645329

0.1207

X2

-0.038612

0.069658

-0.554309

0.5875

X3

0.253022

0.058462

4.327949

0.0006

X4

-1.840432

0.344055

-5.349239

0.0001

X5

-0.185844

1.846007

-0.100673

0.9211

R-squared

0.993095

Mean dependent var

7,234.605

Adjusted R-squared

0.990793

S.D. dependent var

6,842.302

S.E. of regression
Sum squared resid

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Coefficient

656.5288
6465451.

Akaike info criterion

16.04677

Schwarz criterion

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Log likelihood

-162.4910

Durbin-Watson stat

431.4671

F-statistic

1.094192

Prob (F-statistic)

0.000000

Table 3. Correlation matrix.

X1
X1

1.000000

X2

X2

X3

X4

X5

0.994078

0.991053

0.994819

0.998566

0.998777

0.995796

0.992788

1.000000

0.994326

0.990641

1.000000

0.995119

1.000000

X3
X4
X5

1.000000

correlation coefficient in the process of establishing multiple regression equation,

and each correlation coefficient is carried on statistical test in the equation for the
introduction of each independent variable. The independent variable with
significant effect is retained in the regression equations, and the path is made
circularly to select the next independent variable. If the effect is not significant,
stop to introduce new variable. Due to the introduction of new independent
variables,

the

original

independent

variable

is

likely

to

become

not

remarkableness for their effect of the interaction between variables in the

equations, which should be removed from the equation confirmed by statistical
tests, at any time only keep the independent variables with the significant effect.
Until no longer introduce and
328
weed out the independent variables, the optimal regression equation is obtained.
First, fit the regression of Y on X1, X 2, X3, X

and X5 respectively. Table 4

shows the coefficient, t-statistic, its corresponding probability and R2 of all the
explanatory variables.
Now reorder the explanatory variables according to the value of R2: X3, X 2, X1,
X5 and X 4. Based on X3, add other explanatory variables by stepwise regression.
Add X 2, take X 2, X3 as the explanatory variables, the regression results for
the estimation equation is:

(1)

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Figures in brackets represent t-statistic of the coefficient, the corresponding

probability are 0.3318 and 0.0284 respectively. R2 = 0.9776, R 2 = 0.9752, Fstatistic = 393.4936 and its corresponding probability is 0.000000. Given the
significant level = 0.05, in the t distribution list,

the coefficient of
X 2 cannot pass the t test, so X 2 should be eliminated.
Add X1, take X1, X3 as the explanatory variables, the regression results for the
estimation equation is:

(2)
Figures in brackets represent t-statistic of the coefficient, the corresponding

probability are 0.6260 and 0.0006 respectively. R2 = 0.9767, R 2 = 0.9741, Fstatistic = 377.6217 and its corresponding probability is 0.000000. Given the
significant level = 0.05, in the t distribution list,

the coefficient of
X1 cannot pass the t test, so X1 should be eliminated.
Add X5, take X3, X5 as the explanatory variables, the regression results for the
estimation equation is:
Table 4. Results of the regression.
X1
Coefficient

0.582592

X2
0.110832

X3
0.117788

X4
1.143571

X5
3.92584
2

t-statistic

19.93086

25.03962

28.03928

17.73703

19.03753

Prob.(t)

0.0000

0.0000

0.0000

0.0000

0.0000

0.954353

0.970587

0.976403

0.943046

0.95018

R2

329

(3)

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Figures in brackets represent t-statistic of the coefficient, the corresponding

probability are 0.0002 and 0.4077 respectively. R2 = 0.9773, R 2 = 0.9748, Fstatistic = 387.6385 and its corresponding probability is 0.000000. Given the
significant

level

0.05,

in

the

distribution

list,

, the coefficient of
X5 cannot pass the t test, so X5 should be eliminated.
Add X 4, take X3, X

as the explanatory variables, the regression results for

the estimation equation is:

(4)
Figures in brackets represent t-statistic of the coefficient, the corresponding
probability are 0.0000 and 0.0006 respectively. R2 =0.9879, R

=0.9866, F-

statistic = 736.3466 and its corresponding probability is 0.000000. Given the

significant

level

0.05,

in

the

distribution

list,

,
the coefficient of X 4 can pass the t test, so X 4 should be maintained.
The equation (4) is obtained after eliminating the multicollinearity, which
shows that growth of financial intermediation is most influenced from the tertiary
industry and the disposable income of urban households. The equation explains
that value-added of financial Intermediation will increase 23.74 million yuan
when the value-added of tertiary industry increases 100 million yuan, other
things being equal. Other conditions remain unchanged, when per capita annual
disposable income of urban households increases 1 yuan, the value-added of
financial Intermediation will increase 118.82 million yuan.
Whether other factors, such as the production of the primary production and
secondary industry, affect the growth of financial intermediation or not? The
partial correlation coefficient is a useful tool to solve this problem.
In general, partial correlation coefficient is used to analyze the relationship
between two variables for accurate analysis to rule out other factors. The partial
correlation coefficient is the indicator of calculation between two variables after

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other factors fixed. It can be explained that an indicator describes the close degree
of a certain correlation between the dependent variable and an independent
variable after the influence fixed of other variables. Its calculation formula is as
follows.
Assume the main determinants of every simple correlation coefficient between
the two variables for the dependent variable y and independent variable x 1, x2, ...,
xp is

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330

Here:

Then the partial correlation coefficient between y and xi

In the formula:
iy, yy, ii are respectively the algebraic complement of main determinants
for riy, ryy, rii, iy, yy, ii are symmetric determinant;
k... is the other independent variables which are fixed; r yx

ik...

is the partial

correlation coefficient between y and xi after other variables

fixed.
Partial correlation coefficient truly reflects the degree of the relevance
between y and xi, which is a better correlation metrics. Based on the Table 1, we
can respectively obtain the 5 partial correlation coefficients of 5 independents to
the dependent as following (Table 5).

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Table 5 shows that tertiary industry production and the disposable income of
urban households are most closely related to the growth of financial
intermediation after other factors excluded or fixed. This also coincides with the
results of multiple regression analysis from one side view.
331
Table 5. The partial correlation coefficient of 5 independents to the dependent.
Partial correlation coefficient
0.391002

Tolerance
0.001875

T(34)

P-level

2.47712

0.01837
6

ryx

1.2345

ryx

2.1345

-0.141678

0.001201

-0.83454

0.40980
4

ryx

3.1245

0.745189

0.001914

6.51592

0.00000
0

ryx

4.1235

0.809986

0.005393

-8.05352

0.00000
0

-0.025985
ryx

5.1234

0.002191

-0.15157

0.88042
3

3. Analyze the spatial differences of financial intermediations

growth
From the study and analysis above, the economic development affects the
financial intermediation to some degree. Conversely, the financial intermediation
should also contribute to the economic development. China is a huge economic
entity with large differences of economic development in the world for the wide
differences of natural resource, environment and the level of financial
intermediations development. So it is necessary to analyze the spatial
differences, especially the degree of the differences, of financial intermediation in
China.
Xie et al. [8] make use of fuzzy estimation methods to do an empirical analysis
in real estate evaluation, which gives a more realistic and reasonable statistical
result. Its application has enlightened this paper with a considerable inspiration
in the light of the features of the data in this paper. One of the classical methods
to analyze the spatial difference is cluster analysis, so this paper selects the

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value-added of financial intermediation, the gross regional product and the total
investment in fixed assets on financial intermediation in 2011 as the variables to
classify the financial intermediations development of 31 provincial administrative
regions in China according to the principle of cluster analysis. The relevant data
is shown in Table 6.
Cluster analysis is a kind of methods to study individual based on the
characteristics of the objects itself, whose purpose is to group similar objects. The
principle is: individuals with larger similarity are in the same category, and
individual difference of the different kinds is very big. Its basic idea is: First, n
samples (or variables) , which will be clustered is seen as a category, the total is n
categories; Then to calculate the clustering statistical distance between the two
categories (or similarity coefficient) by the selected method, the most closely
relationship between the two categories is merged into a category, the remaining
unchanged, namely by n-1 categories; Again according to the same calculating
method to calculate the distance between new category and other categories (or
similarity coefficient), then the two categories have the closest relationship to be a
category, the remaining unchanged, namely get n-2 categories; So, reduce a
category each time, until all the samples (or variables) are classified as only one
category.
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Table 6. Variables and objects of cluster analysis (100 million yuan).
Value-added
of financial
intermediatio

Total investment in
Gross regional
product

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fixed

assets

on

financial
intermediation

Beijing

2,215.4

16,251.9

38.1

Tianjin

756.5

11,307.3

34.7

Hebei

746.0

24,515.8

24.1

Shanxi

519.3

11,237.6

1.7

Inner Mongolia

447.5

14,359.9

45.2

Liaoning

755.6

22,226.7

56.7

Jilin

207.7

10,568.8

4.9

Heilongjiang

350.8

12,582.0

9.3

Shanghai

2,277.4

19,195.7

23.3

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Financial Intermediations Growth in China

Jiangsu

2,600.1

49,110.3

55.4

Zhejiang

2,730.3

32,318.9

25.1

Anhui

503.9

15,300.7

58.2

Fujian

862.4

17,560.2

23.2

Jiangxi

357.4

11,702.8

23.6

Shandong

1,640.4

45,361.8

33.3

Henan

868.2

26,931.0

16.6

Hubei

674.6

19,632.3

30.3

Hunan

501.1

19,669.6

19.6

Guangdong

2,916.1

53,210.3

30.6

Guangxi

445.4

11,720.9

17.8

Hainan

105.2

2,522.7

6.4

Chongqing

704.7

10,011.4

2.5

Sichuan

868.1

21,026.7

31.8

Guizhou

297.3

5,701.8

0.8

Yunnan

456.2

8,893.1

4.1

Tibet

31.7

605.8

0.5

Shaanxi

432.1

12,512.3

2.9

Gansu

145.1

5,020.4

10.4

Qinghai

62.6

1,670.4

0.3

Ningxia

134.2

2,102.2

2.7

Xinjiang

288.8

6,610.1

4.7

Source: China Statistical Yearbook (2012).

Note: Author calculated and processed the data as required.

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For the variables p, the individuals n, dij is defined as the distance between the
individual i and individual j, its
calculating formula is:

It is called as Squared Euclidean Distance, d ij is suitable for the conditions as

follows:

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dij = 0, for the individual i equals individual

j; dij 0, for all i, j; dij = dji for all i, j; dij dik
+ dkj for all i, j, k.
Other distances could be the principle of clustering as well, such as
Standardized Squared Euclidean Distance:

S2k

is

the

variance

of

variable

Minkowsky Distance:

g is usually 1 or 2, when g is 1, called absolute distance; when g is 2, also

called Euclidean distance.
Based on the characteristics of the data and convenience for operation, this
paper directly uses the Euclidean distance to cluster.
Table 6 shows the variables and objects of cluster analysis. Operate the data
in Statistica 6.0. The results are as follows (Figure 1).
Figure 1 shows the result of cluster analysis. From the development status of
financial intermediation, gross regional product and total investment in fixed
assets, its appropriate to divide the 31 provincial administrative regions into 5
categories. Category 1 includes: Beijing, Fujian;
Category 2 includes: Inner Mongolia, Anhui, Tianjin, Shanxi, Jiangxi, Guangxi,
Heilongjiang, Shaanxi, Jilin, Chongqing and Yunnan;
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Figure1. Tree diagram of cluster analysis.

Category 3 includes: Hainan, Ningxia, Qinghai, Tibet, Guizhou, Gansu and
Xinjiang;
Category 4 includes: Hebei, Henan, Liaoning, Sichuan, Shanghai, Hubei,
Hunan and Zhejiang;
Category 5 includes: Jiangsu, Shandong and Guangdong.
The categories have accounted for the relation between economic development
and the development of financial intermediation, generally speaking, developed
economic with developed financial intermediation. It is interesting that Shanghai
is classified in category 4, typically, it should be classified in the same category of
Beijing, perhaps the data, or the objective facts are far away from our usual
logical thought.

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From

the

Figure

1,

Jiangsu,

Shandong

and

Guangdongs

financial

intermediation are relatively developed, and its consistent with gross regional
product and total investment in fixed assets. From the total perspective, financial
intermediation in Northwestern is relatively undeveloped due to the weakness of
basic construction, capital accumulation and education. On the contrary, in the
eastern coastal
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area, rapid economic development contributes to the rapid growth of financial
intermediation. The development of finance depends largely on the development
of real economy and the investment, so its easy to understand the backwardness
of the western regions. The government should encourage the foreign direct
investments in western regions, and further promote the economic growth to
change the situation in China.

4. Conclusions
By the study and analysis above, we have policy recommendations as the
conclusion.
(1) Speed up the development of financial intermediation and further improve its
service function on the real economy.
By the study above, the development of the primary industry and the
secondary industry is not closely related to the development of financial
intermediation. On the one hand, the government should strengthen the financial
intermediation to service the production of the primary industry and the
secondary

industry.

At

present,

the

development

of

urbanization

and

industrialization is rapid in China. The process of economic transformation and

the change of economic development patterns are accelerating. The industrial
structure, economic structure and social structure will experience profound
changes in China. The economy will keep the steady growth and farewell to the
high growth rate, meanwhile, the scale of private investment is rapidly
expanding. The social structure is further complicated, the power and role of the
capital in social and economic activities will be further intensified. Therefore, it is
required to provide more comprehensive and high quality service of the financial

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intermediation, only in this way, it could be run with steady and high efficiency to
meet the needs of the development of real economy.
(2) Elevate the financial security to the level of national strategy, and strengthen the
prevention of financial risk for the tertiary industry and resident life.
Financial risk is a global and centurial puzzle. The government should realize
its huge influence on the national economic development from the financial risk
on the level of the national strategy. China should gradually increase the
proportion of direct financing in total social investment, and play an active role in
allocation of social resources, establishing and improving the requirements of
market-oriented financial mechanism. At the same time, China need to optimize
social financing structure, improve the efficiency of resource allocation of financial
intermediation, which is effective to prevent and control financial risks, maintain
financial stability and meet financial security requirements to make the financial
intermediation serve the social public better, and promote the healthy growth of
tertiary industry.
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(3) Accelerate the internationalization of financial intermediation, pay attention to
the depth of the financial market and increase the efficiency of the financial
intermediation.
From the regression analysis and cluster analysis above, the own efficiency of
financial intermediation is not very high, so it is necessary to adjust the internal
structure of the financial intermediation to improve the working environment of
the financial intermediation and merge into the system of international finance.
Financial globalization is the trend of financial intermediation development
during the modern times. The internationalization of finance will speed up the
process of the economy and finance integrating into the international community,
and enhance the international competitiveness of Chinas financial institutions.
Therefore, China should optimize the financial structure, strengthen the financial
innovation ability, and heighten the comprehensive competitiveness of financial
enterprises. Meanwhile, paying attention to the construction of financial
development and financial cultural environment, raising the efficiency of financial
production and enhancing the national financial well-being, then China will be a
powerful financial country.

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ACKNOWEDGEMENTS
This article is subsidized by the National Natural Science Foundation of
China, Spatial Layout and Development Path of Strategic Emerging in China
(No.: 71273276).

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