Does financial expansion breed financial risks?
DOI:
https://doi.org/10.54691/bcpbm.v49i.5444Keywords:
Financial Expansion, Financial Risks,Abstract
The rapid expansion of China's financial industry has brought about significant concerns regarding financial risks. This paper empirically analyzes the relationship between financial expansion and financial risks using panel data from 30 provinces in China (excluding Tibet) from 2006 to 2019. Heterogeneity analysis is conducted at the regional level, and reasonable and the model of moderating effects is constructed to examine the pathways through which financial expansion affects financial risks. The results indicate a significant "inverted U-shaped" relationship between financial expansion and financial risks. Further analysis reveals that factors such as the development level of factor markets, real estate investment, financial decentralization, and financial regulation have promoting or inhibiting effects on this relationship. Moreover, the impact of financial expansion on financial risks is more pronounced in the eastern regions or economically underdeveloped areas.
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