Journal of Applied Finance & Banking

Can the establishment of the Guangdong-Hong Kong-Macao Greater Bay Area promote Capital Mobility and regional economic integration?

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• Abstract

   

  This paper assesses the economic integration and regional capital mobility in the Guangdong-Hong Kong-Macao Greater Bay Area (hereinafter referred to as the GBA) of China during the period from 1978-2020 by employing panel cointegration and the fully modified OLS (FMOLS) method. To consider the factors influencing the capital market environment, we extended the traditional F-H (Feldstein & Horioka) model by constructing the unconditional F-H model and the conditional F-H model. The overall capital mobility and the overall economic integration of the GBA indeed improved, with Guangdong and Macao being the regions with the greatest benefits, except for Hong Kong where capital mobility has been hampered at this stage.

   

  JEL classification numbers: E60, E66, O10, O20.

  Keywords: Regional economic integration, Capital mobility, Guangdong-Hong Kong-Macao Greater Bay Area (GBA), Feldstein–Horioka (F-H) model, Panel cointegration and panel FMOLS.