Does the Opening of High-Speed Rail Change Urban Financial Agglomeration?

Abstract

High-speed rail (HSR) in China has led to altered spatiotemporal distances, thus inevitably affecting the regional economies. Has HSR also impacted the urban financial pattern? We analyze the relationship between HSR and financial agglomeration in 283 prefecture-level cities in China and find that HSR significantly reduces urban financial agglomeration and promotes financial diffusion. After the opening of HSR, financial employees (AGGE) and deposit agglomeration (AGGD) decrease by 0.06 and 0.07, respectively. Specifically: (1) HSR creates a financial diffusion effect by promoting industrial restructuring and technological innovation, thereby preventing excessive financial agglomeration in cities; (2) the heterogeneity analysis shows that financial factors are generally diffused from east to west, and HSR mainly causes a decrease in financial agglomeration in the eastern region; (3) we construct four spatial matrices for regression to further verify the impact of HSR, and we find that the indirect effect of HSR on financial agglomeration is more significant compared to the direct effect.