Urban agglomeration policy and urban commercial banks'liquidity creation:dual perspectives based on agglomeration effect and market integration effect
Considering that the liquidity creation of urban commercial banks serves the local real econo-my and affects the stability of the financial system in China,this paper selects a sample composed of 121 ur-ban commercial banks from 2007 to 2020 and uses Time-varying Difference-in-Difference model to em-pirically test the influence and mechanism of the urban agglomeration policy on the liquidity creation of ur-ban commercial banks.The study finds that,on the one hand,the urban agglomeration policy increases the liquidity creation level of urban commercial banks through improving cities'agglomeration ability,which is called agglomeration effect.On the other hand,the urban agglomeration policy also decreases the differ-ences in the liquidity creation level of urban commercial banks within the coverage of the policy through weakening the market segmentation formed by the administrative division and cultural differences,which is called market integration effect.The results of the heterogeneity analysis on the"center-periphery"struc-ture further show that the agglomeration effect of urban agglomeration policy promotes the coordinated eco-nomic growth of the center and peripheral cities,and the market integration effect promotes the spillover of over-saturated financial resources from the central cities to peripheral cities with a geographic distance of 160～240 kilometers,and thus disperse financial risks concentrated in central cities.
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