Bank Geographical Proximity and its Impact on Local Enterprise R&D Investment: A Financial Geography Perspective

The purpose of the paper is to investigate the relationship between the geographical proximity of banks to enterprises and the level of R&D investment of enterprises in local governance process by constructing a credit model based on the perspective of financial geography. By using China's 2012-2019 provincial panel data and spatial measurement method, it is possible to demonstrate the process of argumentation. Based on the findings of our research, we found that a regional enterprise's proximity to a bank branch and its cognitive proximity to the bank branch's headquarters positively impact the level of R&D that an enterprise in the region is able to achieve. There is also a spatial spillover effect associated with the geographic and cultural proximity between bank branches and their headquarters. In conclusion, to give full play to the financial support role of banks in the R&D of enterprises in various regions of China, the impact of geographical proximity on financial activities and the optimization of the geographical distribution structure of the banking industry is suggested to be noticed.