The Impact of Financial Agglomeration on Regional Innovation and Entrepreneurship Activity: "Catalyst" or "Inhibitor"

One crucial way to address the employment paradox and the lack of innovation is to boost regional innovation and entrepreneurship, and stimulate the internal power of high-quality development. This study examines the multifaceted impacts of financial agglomeration on innovation and entrepreneurship activity from the standpoint of upgrading industrial structure, employing province panel data from China from 2011 to 2020. Financial agglomeration is measured using the location entropy index, while innovation and entrepreneurship activity is computed utilizing the entropy weight technique. Using fixed, intermediary, and threshold impact models, the direct transmission mechanism, indirect influence mechanism, and nonlinear effect of financial agglomeration on innovation and entrepreneurship activity are investigated. The outcomes that follow are the results: First, financial agglomeration acts as a "catalyst" in the process of innovation and entrepreneurship, that is, it has a direct driving effect, and presents a gradient distribution of "East > Midwest"; Secondly, financial agglomeration has an indirect transmission effect on innovation and entrepreneurship activity through the "structural effect" in which industrial structure is advanced as an intermediate variable; Finally, as financial agglomeration crosses the threshold value, It first exhibits the characteristic of a somewhat growing threshold impact before progressively strengthening its influence on innovation and entrepreneurship activities. In an effort to encourage financial agglomeration and improve the capacity for innovation and entrepreneurship, this paper offers some relevant references.