A new composite financial maturity index and its application to China’s province-level regions

Abstract

This paper introduces a new regional “financial maturity index” (FMI) based on previous studies of financial development theory. We explore a unified measure of regional financial development by constructing a new composite financial maturity model. This paper presents a regional FMI measurement process to study 31 Chinese provincial level regions for the year 2012. Our empirical results correctly reflect the integrated financial development level of different areas, which can be summarized as gradually diminishing as we move from eastern to western areas within China. This trend is also consistent with the characteristics of China’s regional economic and social development