The Impact of Financial Resilience and Steady Growth on High-Quality Economic Development—Based on a Heterogeneous Intermediary Effect Analysis

Abstract

Finding a way to move the economy away from rapid growth and toward high-quality development is essential for China’s economic success. Financial resilience and steady economic growth provide possible paths for high-quality economic development. This paper uses the panel data of 31 provinces and cities in mainland China from 2009 to 2020 to establish a comprehensive evaluation indicator system using the entropy weight method so as to measure the level of high-quality economic development and financial resilience of each province and city. On this basis, combined with the System-GMM estimation method of the dynamic panel system and the intermediary effect model, the impact of financial resilience and stable growth on high-quality economic development is demonstrated. The results show that financial resilience is essential for fostering high-quality economic development, and that steady growth plays a beneficial intermediary position in the connection between financial resilience and high-quality economic development. Furthermore, the impact of financial resilience and steady growth on high-quality economic development has obvious regional, developmental stage, and industrial structure heterogeneity characteristics. Therefore, enhancing financial resilience and boosting steady growth can serve the economy and boost high-quality economic development.

1. Introduction

China’s sustained and high-quality economic development has produced new outcomes, achieving the dual objectives of more growth and lower inflation in 2021 [1,2,3,4]. However, the uncertainties and emergencies faced by the Chinese economy in 2022 have become increasingly complex and severe. First of all, China is facing a serious economic downturn. China’s GDP has expanded by 2.2% in 2020, compared to 10.3% in 2010. The economic downturn has brought pressure on the survival of market entities, the fiscal revenue and expenditure of governments at all levels, the use of bank credit funds, and the employment status; therefore, the domestic risks are also increasing. Secondly, the impact of the new epidemic has intensified the world’s financial turmoil. The International Monetary Fund’s global growth forecast for 2020 was also sharply lowered to −4.9% [5]. Henry Kissinger believes that the new epidemic will change the world order forever; therefore, no matter how difficult and necessary it is to deal with the crisis, we should also take into account the urgent task of transitioning to the post-epidemic period [6]. Many scholars believe that the impact of the epidemic is more serious than the global financial crisis in 2008. It will not only lead to the loss of many jobs, but also to a historic turn in the geo economy. People will witness a new geo-economic scene in the post-epidemic period [7]. The impact of the epidemic has strengthened these three trends without exception: it has strengthened the role of the government; contributed to the anti-globalization force; and hit global economic growth heavily. Rodrik stressed that the world economy has embarked on a fragile and unsustainable path, and the new epidemic has made the challenges we face clearer. Therefore, the epidemic situation is undoubtedly an extremely important “change” factor that has not changed in the world in a century.

At the historical juncture of the “post epidemic period” and high-quality economic transformation and upgrade, how will China’s economy be affected? What is China’s economic growth potential? How much room is there for macroeconomic policies? How can sustainable high-quality development be achieved? These are all major economic development issues that need to be answered urgently. In such a complex domestic and international situation, the People’s Bank of China drafted the Financial Stability Law (FSL) in April 2022, which addresses financial risk prevention, resolution, and disposal. The FSL imposes high requirements on the financial system’s ability to prevent risks, recover from shocks, and to innovate; therefore, the importance of financial resilience has gradually become prominent [8], and examining the role of financial resilience and steady growth in high-quality economic development is essential.

Financial resilience means the capacity of financial conditions to maintain their own stability and self-adjustment and to recovery under external shocks. According to the different types of microeconomic individuals, they can be divided into the financial resilience of the family [9], the financial resilience of the government [10], and the resilience of the financial market [11,12]. Among them, the impact of external shocks on governments and households will play a role through financial markets and financial institutions.

The policy of steady growth was first proposed in 2009. Given that the national economic situation was not optimistic, the relatively stable economic growth policy became the theme of the China Economic Work Conference that year. Since then, the goal of “stabilizing growth, adjusting structure and promoting transformation” was set in 2010, which is still the top priority of China’s economic development. By 2022, the Central Economic Work Conference of China had made stabilizing growth an important task. The meeting put forward the general tone of “stability first, progress in stability”. There is no doubt that the 20th National Congress is extremely important in the history of China, and the need for steady growth is extremely urgent. Economic growth is not only at the core of financial market operations but is also an important cornerstone of economic development. Steady growth advocates slowing down the economic growth and seeking progress while maintaining stability. In the short term, steady growth seems to be detrimental to economic development, but an in-depth discussion of the influence of financial resilience and steady growth on high-quality economic development can provide more countermeasures for stable and efficient economic development.

The corresponding academic research on high-quality development is still in its initial stages; therefore, an interpretation of some typical, similar, evaluation indicator systems in developed countries or economies is conducive to building a high-quality development evaluation indicator system in China with an international perspective. Although different countries have different social systems and basic national conditions, they still share many common development concepts based on the basic laws and inevitable trends of human social development. In May 2001, the European Commission published the “Sustainable Europe Makes the World a Better World: EU Sustainable Development Strategy”, which put forward the sustainable development strategy idea. Since then, after revisions in 2006 and regular evaluations starting in 2007, and the EU’s sustainable development strategy was included in the “Europe 2020 Strategy” in 2010, which has attracted much attention for many years. Presently, the sustainable development strategy of the EU has emerged as a vital guide for advancing the social and economic advancement of EU countries. Eurostat started to compile a sustainable development index in 2007 and released a sustainable development monitoring report. In the monitoring report released in May 2017, Eurostat made significant adjustments to the evaluation themes that have been used for ten years [13,14]. Although the social systems and development paths of China and EU countries are different, these are exactly the aspects that China pursues for sustainable and high-quality development.

China’s existing financial resilience is under a greater and more urgent challenge as a result of how finance might assist the real economy more efficiently to encourage high-quality economic development. Previous studies have only looked at the connection between steady growth and high-quality economic development or the association between financial resilience and such development, but the interrelationship of these three ideas has not been investigated concurrently by any academic.

Therefore, to make up for the above shortcomings, this paper attempts to do two things:

First, to explore the roles of financial resilience and steady growth in high-quality economic development and then to determine if steady growth acts as a mediating factor in the impacts of financial resilience on high-quality economies.

Second, to explore whether there is a regional, development stage, and industrial structure heterogeneity in the effect of financial resilience and steady growth on high-quality economic development. Our study’s organization is as follows: First, combined with the existing research, this paper analyzes the mechanism of financial resilience and steady growth on high-quality economic development. Then, constructing a dynamic panel model, it performs a full sample test and regional, development stage, and industrial structure tests, respectively. It also shows how closely connected financial resilience, steady growth, and high-quality economic development are internally. Finally, this study offers pertinent policy suggestions.

2. Theoretical Background and Hypothesis

2.1. Financial Resilience and High-Quality Economic Development

In terms of the regulatory reform documents and measures created following the global financial crisis, financial resilience involves the efficiency of the financial system in serving the real economy as well as issues such as self-learning, reform, and transformation [15,16,17]. China is moving through a pivotal phase of change toward high-quality development. To gain the “double triumph” of preventing epidemics and achieving high-quality economic development, the financial sector’s capacity for providing services has to be enhanced [18,19,20]. Throughout 2008, rebuilding financial resilience as a policy tool to achieve a soft landing for the economy was the focus of global financial supervision. Since 2018, financial resilience has begun to enter China’s financial policy. The concepts of “enhancing the resilience of the financial system” and “creating a regulated, transparent, open, dynamic and resilient capital market” have been repeatedly emphasized. Currently, the “14th Five-Year Plan” is still in its early stages in China, and enhancing financial resilience will inevitably provide strong financial support for constructing a novel model and encouraging high-quality development. Some scholars have studied the connection between financial resilience and high-quality economic development. For example, the Bank for International Settlements (2018) pointed out that strengthening the financial system’s resilience can effectively prevent the financial services in the real economy from being interrupted by a shock or crisis [21]. Additionally, Ratnawati K (2020), Josephine, and Angela (2022) asserted that it is necessary to formulate measures for enhancing financial resilience to achieve high-quality economic development [22,23]. Economic development can be facilitated by supply-side financial structural improvements aimed at enhancing the effectiveness of the supply system [24]. Moreover, support from national policies is equally important, and the use of national comprehensive investment funds for R&D can promote a leapfrog development of the economy [25]. Different types of finance play different roles in economic growth, and their resilience has different effects on steady growth, for example, Berger et al. investigated how different types of debt affect a firm’s value. Studies have shown that when there is a significant concentration of bank debt, it can boost the business value and spur economic growth [26]. The application of resilience in the financial field is mainly based on numerical simulation. For example, the financial system’s resilience in a scenario of increasing corporate defaults and declining asset values was simulated by Anand et al. (2013) [27], whereas Peron et al. (2012) [28] used dynamic entropy to measure the resilience of financial market networks, and found that the synchronous evolution of stock prices weakened the network resilience.

All of these studies show that financial resilience is closely related to the quality of economic development. China’s financial markets are becoming a more cohesive whole, but at the same time, risks will spread faster through this tightly interconnected financial market network. Therefore, enhancing financial resilience to achieve the purpose of absorbing risks can effectively promote economic development; thus, we propose Hypothesis 1:

Hypothesis 1 (H1).

Financial resilience will promote high-quality economic development.

2.2. Steady Growth and High-Quality Economic Development

Steady growth and high-quality economic development are closely related concepts with certain differences. In terms of speed and scale, steady growth emphasizes a quantitative expansion and reveals the quantitative effectiveness of economic growth. High-quality development with a broader scope has more stringent standards than steady growth, and it may better represent new ideas and new developments in the modern day, including those in the economic, social, and environmental spheres. Chinese economic development following the country’s reform and openness is undoubtedly a kind of extensive growth that only pursues speed and quantity, causing the economic environment to deteriorate, the imbalance of the economic structure to worsen, an expanding wealth disparity between the wealthy and the poor, and other quality problems of economic development [29,30]. However, in 2010’s third quarter, the potential economic growth rate began to decline; thus, China began to pursue high-quality development [31]. Zhao J (2018) emphasized that growth is unstable, and that the economy’s downward pressure would cause structural adjustment to occur more slowly, making achieving high-quality economic growth difficult [32]. With reference to the definitions of Hausmann et al. (2005) [33] and Eichengreen et al. (2012) [34] on the economic slowdown, “stable economic growth” refers to economic growth with enough power to step through a continuous deceleration period. Fernandez Villaverde et al. (2015) [35] used a small, open economy model to study the impact of volatility shocks. The results showed that unstable economic growth will lead to an economic recession. In theory, steady growth is a short-term issue, whereas it takes time to encourage high-quality economic growth [36]. Seeking progress while maintaining stability is a key scientific methodology to boost economic endeavors and is a long-term strategic task, but in the process of rapid growth and reform, China faces various risks [37]. The processing and handling of such risks require a relatively stable macroeconomic environment to prevent excessive economic fluctuations, which in turn requires steady growth [38]. Steady growth can provide indispensable material conditions for high-quality economic development [39,40], and exploring the relationship between the two factors is of long-term significance for the sustainability of China’s economy. The above research shows that to achieve high-quality economic development, we need to not only focus on the efficient improvement of economic quality but also to take into account the reasonable growth of economic quantity. In the context of China’s economic downturn, balancing the pressure of steady growth in the short term with the requirements of high-quality development in the medium and long term should still be “stable”; thus, we propose the following hypothesis:

Hypothesis 2 (H2).

Steady growth can provide an essential foundation and environment for high-quality economic development.

2.3. The Interaction between Financial Resilience, Steady Growth and High-Quality Economic Development

In the International Monetary Fund (2018), China should notice the following issue to strengthen its financial resilience: the marketization of credit allocation can alleviate financial risks, enhance financial resilience, and promote high-quality economic development [41]. Asteriou D (2019) believed that the building of a resilient financial system will be crucial to steady growth and boosting the quality of economic development [42]. During its executive meeting, the State Council of China deployed a variety of actions to support steady growth in 2022, including determining strategies to boost financial assistance for the real economy and reducing the direct market participants’ financing costs. The development of a resilient financial system will be crucial for stabilizing growth and altering the structure of the economy [43,44], and boosting high-quality development. The effect of financial resilience on the high-quality development of the economy may play a partial role through steady growth; thus, we present Hypothesis 3:

Hypothesis 3 (H3).

Steady growth plays an intermediary role in the process of financial resilience promoting high-quality economic development.

An obvious interactive relationship exists between financial resilience, steady growth, and high-quality economic development, as shown in Figure 1.

1. In areas with strong financial resilience, financial institutions and financial markets tend to be highly diversified, and the financial services are complete. In the face of actual economic risks, such regions can quickly play a defensive role and effectively absorb economic fluctuations, which can stabilize economic development.

2. Steady growth can provide a satisfactory external environment and material foundation for high-quality economic development, which is helpful for the implementation of innovation-driven growth strategies. Similarly, high-quality economic development is advantageous for accelerating the transformation of traditional industries, further activating the driving force of development and promoting steady growth.

3. Strengthening financial resilience can effectively prevent an increase in malignant risks between a financial system and the real economy. It can also give full play to the functions of finance, thereby improving the resource allocation efficiency and enhancing the ability of financial services in the real economy to provide a strong impetus for high-quality economic development.

3. Model Specification and Data

3.1. Model Specification

This paper selects stable growth as an intermediary variable, discusses the role of financial resilience in high-quality economic development, and constructs the following intermediary effect model:

$${\mathit{ED}}_{\mathit{it}}={\alpha }_0+{\alpha }_1{\mathit{Fin}}_{\mathit{it}}+{\alpha }_2{\mathit{InCon}}_{\mathit{it}}+{\alpha }_3{\mathit{Open}}_{\mathit{it}}+{\alpha }_4{\mathit{Gov}}_{\mathit{it}}+{\alpha }_5{\mathit{InInv}}_{\mathit{it}}+{\alpha }_6{\mathit{Urban}}_{\mathit{it}}+{\alpha }_7{\mathit{ED}}_{\mathit{it}-1}+{\epsilon }_{1\mathit{it}}$$

(1)

$${\mathit{Grow}}_{\mathit{it}}={\beta }_0+{\beta }_1{\mathit{Fin}}_{\mathit{it}}+{\beta }_2{\mathit{InCon}}_{\mathit{it}}+{\beta }_3{\mathit{Open}}_{\mathit{it}}+{\beta }_4{\mathit{Gov}}_{\mathit{it}}+{\beta }_5{\mathit{InInv}}_{\mathit{it}}+{\beta }_6{\mathit{Urban}}_{\mathit{it}}+{\beta }_7{\mathit{Grow}}_{\mathit{it}-1}+{\epsilon }_{2\mathit{it}}$$

(2)

$${\mathit{ED}}_{\mathit{it}}={\gamma }_0+{\gamma }_1{\mathit{Fin}}_{\mathit{it}}+{\gamma }_2\mathit{Grow}+{\gamma }_3{\mathit{InCon}}_{\mathit{it}}+{\gamma }_4{\mathit{Open}}_{\mathit{it}}+{\gamma }_5{\mathit{Gov}}_{\mathit{it}}+{\gamma }_6{\mathit{InInv}}_{\mathit{it}}+{\gamma }_7{\mathit{Urban}}_{\mathit{it}}+{\gamma }_8{\mathit{ED}}_{\mathit{it}-1}+{\epsilon }_{3\mathit{it}}$$

(3)

where i denotes the province (i = 1, 2, …, 31), t means the year, ED is an indicator of high-quality economic development, Fin denotes the financial resilience, and Grow is an indicator of steady growth. We also added some control variables to the model, including the level of household consumption (Con), the degree of trade openness (Open), a government scale indicator (Gov), social fixed asset investment (Inv), and the urbanization level (Urban), while ε is the error term. In the above formulas, ${\gamma }_1$ is the direct effect of financial resilience on high-quality economic development, and ${\gamma }_2\times {\beta }_1$ expresses the intermediary effect transmitted through steady growth; therefore, the proportion of the direct effect in the total effect is ${\gamma }_1/\left({\gamma }_1+{\gamma }_2\times {\beta }_1\right)$, and the proportion of the mediating effect in the total effect is ${\gamma }_2\times {\beta }_1/\left({\gamma }_1+{\gamma }_2\times {\beta }_1\right)$.

Figure 2 shows the four main steps of the intermediary effect test.

Step 1: Testing the core explanatory variable coefficient ${\alpha }_1$ in Formula (1) to identify whether it is significant at the confidence level;

Step 2: Using Formula (2) and (3) to regress and test the coefficients ${\beta }_1$ and ${\gamma }_2$ of the relevant variables. If the above coefficients are significant, the third step can be directly tested. If at least one of them is not significant, the fourth step should be performed;

Step 3: Testing the significance of coefficient ${\gamma }_1$. If the aforementioned coefficient is significant, a partial intermediary effect may exist. The presence of a complete intermediary effect is shown if the aforementioned coefficient is not significant;

Step 4: If at least one of ${\beta }_1$ and ${\gamma }_2$ is not significant, a Sobel test is required to prove whether there is a mediation effect. If the findings of the Sobel test are significant, it signifies that there is an intermediate effect; if the results of the Sobel test are not significant, there is not one.

3.2. Data

There are 31 provincial administrative regions in the Chinese Mainland, including 22 provinces, 5 autonomous regions, and 4 municipalities directly under the Central Government; therefore, we selected the panel data of the 31 Chinese provinces and cities from 2009 to 2020 as the sample for the empirical analysis. The panel data of 31 provinces selected in this paper can comprehensively reflect China’s economic development. The relevant data are mainly from the China Statistical Yearbook and the China Stock Market & Accounting Research database. Interpolation was used to fill the missing data. We used the entropy weight method to normalize the result variables and explanatory variables to reduce the deviation of the results.

The outcome variable was the high-quality economic development (ED). To measure the degree of ED in different regions, we needed to first build a scientific and reasonable evaluation indicator system. After fully collating and drawing on the relevant similar evaluation indicator systems from all over the world, the development evaluation indicator body was established in this paper and is shown in

Table 1. Indicator system for high-quality economic development.

Classification Indicators	Secondary Indicators	Basic Indicators	Type
Innovative development	Innovation input	Share of technology spending	+
		Share of education spending	+
		Proportion of tech employees	+
	Innovation output	Number of colleges and universities per 10,000 people	+
		Number of college teachers per 10,000 people	+
		Number of students per 10,000 people	+
		Number of patent authorizations per 10,000 people	+
Coordinated development	Demand structure	Consumer demand	+
	Urban and rural structure	Urbanization level	+
	Industrial structure	The proportion of the tertiary industry	+
	Economic and social coordination	Government debt burden	−
ECO development	Environmental governance	Per capita park green space	+
		Proportion of environmental protection expenditure	+
		Elasticity coefficient of energy consumption	+
	Pollution reduction	Wastewater produced per unit	−
		Exhaust gas per unit output	−
Open development	Open economy structure	Foreign capital dependence	+
		Foreign trade dependence	+
Shared development	Standard of living	Engel’s coefficient for towns	+
		Rural Engel coefficient	+
		GDP per capita	+
		Residential income growth elasticity	+
	Guarantee service	The proportion of workers’ compensation	+
		Urban–rural consumption gap	+
		Proportion of people’s livelihood fiscal expenditure	+

for the five major development concepts in China [45,46,47]. Finally, each indication was measured using the entropy weight approach. In Table 1, the specific indicators are listed.

In this study, the core explanatory variable was financial resilience (Fin). The entropy weight approach was utilized to construct a financial resilience evaluation indicator, which included three classification indicators and 12 secondary indicators as shown in

Table 2. Indicator system for financial resilience.

Classification Indicators	Secondary Indicators	Measures	Type
Defense resistance	Unemployment rate	The registered urban unemployment rate	−
	Proportion of financial added value	Financial added value/third output value	+
	Non performing loan ratio	Loan provision ratio/provision coverage ratio	−
	Loan–deposit ratio	Total loans/deposits	+
Adaptive resilience	Proportion of financial supervision	Financial supervision expenditure/Financial expenditure	+
	Proportion of premium expenditure	Premium expenditure/GDP	+
	GDP growth	GDP growth rate	+
	Proportion of local financial social security and employment expenditure	Local financial social security and employment expenditure/GDP	+
Transfer learning ability	Proportion of R & D expenditure	R & D expenditure/GDP	+
	Proportion of tertiary industry	Proportion of tertiary industry in GDP	+
	GDP index of tertiary industry	GDP index of tertiary industry (last year = 100)	+

.

In this study, the mediating variable was steady economic growth. The key point of steady growth is to increase the potential output per labor force; therefore, we used the output per labor force of each province to measure the steady economic growth level, that is, the ratio of GDP to the number of employees. The more likely the output will stabilize within a certain range, the steadier the growth.

Consumption, investment and export are compared to the “troika” to promote economic development. The current form of China’s economy is basically presented through the “three carriages” of consumption, investment, and export, which play a crucial role in driving economic transformation. Urbanization helps to transfer labor from rural areas to cities, to increase urban labor supply, to drive industrial development and to effectively promote economic development. The government’s macro-control is also crucial to the high-quality economic development. Thus, the following five control variables were chosen.

• Consumption: This is measured by the per capita household consumption expenditure. As the first power to stimulate economic growth, the level of residents’ consumption represents the huge potential and broad space for the high-quality development of China’s economy.
• Trade openness: This is measured by the proportion of the total import and export trade of provinces and cities in the GDP. Adhering to a high level of opening up is a necessary condition for putting into practice the new development idea and fostering high-quality development, as well as a forging and upgrading process of the internal driving force of the economy.
• Government intervention (Gov): This is measured by the fiscal expenditure as a percentage of the GDP. The Chinese government can effectively maintain macroeconomic stability by implementing macroeconomic policies.
• Investment (Inv): This is measured by the stock of fixed asset investment in the whole society. Consolidating the fixed asset investment can provide a strong guarantee and support for economic development.
• Urbanization level (Urban): This is measured by the proportion of the urban population to the total population. Urbanization is an important engine of economic growth. The coming decades will be a critical period for China to drive urbanization economic growth.

Table 3. Descriptive statistics of sample variables.

Variables	Symbol	Observations	Mean	Median	S.D.	Min.	Max.
High-quality economic development	ED	372	0.254	0.226	0.115	0.118	0.845
Financial resilience	Fin	372	0.251	0.239	0.0720	0.136	0.536
Steady growth	Grow	372	8.856	7.542	5.119	2.094	32.88
Consumption	Consumption	372	9.531	9.543	0.450	8.377	10.73
Trade openness	Open	372	0.274	0.140	0.300	0.00800	1.464
Government intervention	Gov	372	0.0840	0.0720	0.0470	0.0210	0.305
Investment	Inv	372	9.325	9.391	0.950	5.938	10.99
Urbanization level	Urban	372	0.561	0.552	0.138	0.222	0.945

displays the findings of a descriptive statistical analysis of data on the explanatory variables, mediator variables, explained variables, and control variables.

4. Empirical Results

4.1. An Analysis of the Mediating Effect of Steady Growth on High-Quality Economic Development

Incorporating the one-period lag of the dependent variable into the regression is required in order to conduct a dynamic panel regression because traditional static panel regression does not account for the influence of the dependent variable in the prior period on the current dependent variable. The traditional parameter estimation approach will be biased and inconsistent if the lag term of the dependent variable is included. Arellano and Bond proposed to adopt the GMM estimation to solve the aforementioned matter. The estimation method can be divided into a Difference-GMM estimation and a System-GMM estimation. We chose the two-stage System-GMM estimation to estimate the dynamic panel data model. In the estimation, we tested whether the instrumental variables in the model were overidentified and whether an autocorrelation existed. The results of the Arellano–Bond test showed that no serial correlation existed in the second-order residual sequence, and the Hansen test results revealed that the p-value was much larger than 0.1; therefore, no overidentification problem existed. Thus, under this condition, the System-GMM result was valid.

Table 4. Full-sample mediation test results.

Variables	(1) ED	(2) Grow	(3) ED
Fin	0.329 *** (20.23)	2.462 *** (12.16)	0.147 *** (13.64)
Grow			0.077 *** (12.58)
InConsumption	0.011 (0.54)	0.163 * (1.89)	0.014 *** (3.03)
Open	−0.068 *** (−7.09)	0.654 *** (6.75)	−0.101 *** (−8.92)
Gov	0.304 *** (2.83)	108.437 *** (121.13)	−7.892 *** (−11.47)
Inv	−0.011 *** (−4.45)	−0.255 *** (−8.40)	0.009 *** (2.73)
Urban	0.416 *** (2.73)	−0.380 (−0.58)	0.264 *** (3.80)
L.EQ	0.129 *** (5.57)		0.143 *** (4.27)
L.Grow		−0.009 (−1.18)
N	310	310	310
AB test for AR (1)	0.002	0.002	0.001
AB test for AR (2)	0.658	0.156	0.841
Hansen test	1.000	1.000	1.000

Note: *** and * denote the significance level at 1% and 10%, respectively. The standard errors are reported in parentheses.

displays the results of the intermediary effect regression.

The results showed that financial resilience had a positive effect on high-quality economic development. Strengthening financial resilience can effectively improve the capacity of financial systems to serve the real economy. Moreover, the influence coefficient of financial resilience on stabilizing growth was significantly positive at the 1% level, thereby indicating that the enhancement of financial resilience was also positive to steady growth.

After adding the intermediary variable, we found that the direct effect of financial resilience on high-quality economic development was still overwhelmingly positive. The regression coefficient of steady growth on financial resilience was also significantly positive at the 1% level.

The finding suggests that the process of financial resilience promoting high-quality economic development will bring about stable economic growth. In addition, it can play a partial intermediary role in promoting high-quality economic development through the intermediary variable of steady growth. The mediating effect of steady growth accounts for about 56.3% of the total effect. This outcome may be related to the government’s commitment to enhancing financial resilience and building a resilient and highly adaptable financial inclusion system. On the one hand, a solid financial industry foundation can create a highly stable and secure financial environment for steady growth. On the other hand, the government prominently prioritizes the stabilization of the macroeconomic market, which can boost the capability of financial services for the high-quality economic development. Therefore, steady growth plays a vital mediating role in the influence of financial resilience on high-quality economic development.

The results of the relevant control variables on high-quality economic development were based on the regression coefficients in column (3). The effect of residents’ consumption levels on high-quality economic development was vitally positive, which indicates that a consumption upgrade can achieve the initial results and play the role of a “booster” for high-quality economic development. This role mainly shows that a consumption upgrade can promote a high-quality supply and drive a high-quality demand to promote coordinated economic and social development. In addition, a vital positive correlation existed between the fixed asset investment of the whole society and high-quality economic development. This result shows that the steady growth of fixed asset investment can effectively boost economic transformation and upgrading, thereby laying a solid foundation for economic sustainability. Moreover, the urbanization level had a significant positive impact on high-quality economic development mainly from the acceleration of a population mobility, intensive use of land, and the construction of infrastructure. Meanwhile, the impact of trade openness on high-quality economic development was negative, which may be because the role of trade openness was suppressed to a certain extent under the complex international economic situation, such as the intensification of the Sino–US trade conflict and a decoupling of the global supply chains. Furthermore, excessive government intervention will weaken the dominant position of the market economy and its impact will be negative.

4.2. Robustness Tests

To verify whether our empirical conclusions from the benchmark regression could be generalized as general conclusions, we conducted robustness tests on the regression results from the perspective of a static panel regression and a shrink-tailed regression:

(1) We used the static panel regression method to test the robustness of the System-GMM regression results. We omitted the lag term of the dependent variable from the model and added two dummy variables to control for the province–time two-way fixed effects and to minimize the deviation of the omitted variables. The model is shown as Formulas (4)–(6):

$${\mathit{ED}}_{\mathit{it}}={\alpha }_0+{\alpha }_1{\mathit{Fin}}_{\mathit{it}}+{\alpha }_2{\mathit{InCon}}_{\mathit{it}}+{\alpha }_3{\mathit{Open}}_{\mathit{it}}+{\alpha }_4{\mathit{Gov}}_{\mathit{it}}+{\alpha }_5{\mathit{InInv}}_{\mathit{it}} +{\alpha }_6{\mathit{Urban}}_{\mathit{it}}+{\mu }_i+{\delta }_t+{\epsilon }_{1\mathit{it}}$$

(4)

$${ \mathit{Grow}}_{\mathit{it}}={\beta }_0+{\beta }_1{\mathit{Fin}}_{\mathit{it}}+{\beta }_2{\mathit{InCon}}_{\mathit{it}}+{\beta }_3{\mathit{Open}}_{\mathit{it}}+{\beta }_4{\mathit{Gov}}_{\mathit{it}}+{\beta }_5{\mathit{InInv}}_{\mathit{it}} +{\beta }_6{\mathit{Urban}}_{\mathit{it}}+{\mu }_i+{\delta }_t+{\epsilon }_{2\mathit{it}}$$

(5)

$${\mathit{ED}}_{\mathit{it}}={\gamma }_0+{\gamma }_1{\mathit{Fin}}_{\mathit{it}}+{\gamma }_2\mathit{Grow}+{\gamma }_3{\mathit{InCon}}_{\mathit{it}}+{\gamma }_4{\mathit{Open}}_{\mathit{it}}+{\gamma }_5{\mathit{Gov}}_{\mathit{it}}+{\gamma }_6{\mathit{InInv}}_{\mathit{it}}+{\gamma }_7{\mathit{Urban}}_{\mathit{it}}+{\mu }_i+{\delta }_t+{\epsilon }_{3\mathit{it}}$$

(6)

where ${\mu }_i$ represents the province fixed effect, ${\delta }_t$ is the time fixed effect, and ${\epsilon }_{3\mathit{it}}$ denotes the random disturbance term.

(2) Considering the influence of some extreme values on the regression estimation, we trimmed the data by 5% at the beginning and end to avoid the influence of outliers. Then, we repeated the mediating effect of the benchmark regression on this basis.

The robustness test results are shown in

Table 5. Results of robustness test.

Variables	Static Panel Regression			Regression with Tails
	(1) ED	(2) Grow	(3) ED	(4) ED	(5) Grow	(6) ED
Fin	0.389 ***	2.777 ***	0.139 ***	0.403 ***	2.241 ***	0.294 ***
	(10.23)	(9.81)	(4.33)	(12.33)	(7.79)	(12.32)
Grow			0.090 ***			0.052 ***
			(16.20)			(12.31)
InConsumption	0.052	−0.122	0.063 **	0.001	−0.159	−0.015
	(1.42)	(−0.45)	(2.31)	(0.08)	(−1.30)	(−1.27)
Open	0.014	0.399 **	−0.022	−0.128 ***	1.157 ***	−0.168 ***
	(0.60)	(2.32)	(−1.27)	(−10.61)	(11.28)	(−9.52)
Gov	0.883 ***	107.319 ***	−8.765 ***	0.294 *	104.120 ***	−4.767 ***
	(5.95)	(97.01)	(−14.47)	(1.71)	(46.96)	(−10.87)
InInv	−0.002	−0.052	0.003	−0.004	−0.237 ***	0.020 ***
	(−0.31)	(−1.05)	(0.54)	(−1.20)	(−4.66)	(4.38)
Urban	0.248 ***	−0.524	0.295 ***	0.385 ***	3.028 **	0.065
	(2.63)	(−0.75)	(4.21)	(3.51)	(2.27)	(0.49)
_cons	−0.502 *	0.814	−0.575 ***
	(−1.71)	(0.37)	(−2.63)
L.ED				0.196 ***		0.277 ***
				(2.62)		(5.12)
L.Grow					0.023
					(1.37)
N	372	372	372	310	310	310
Province	Yes	Yes	Yes
Year	Yes	Yes	Yes
r2	0.793	0.997	0.886
AB test for AR (1)				0.003	0.001	0.001
AB test for AR (2)				0.730	0.125	0.991
Hansen test				1.000	1.000	1.000

Note: ***, ** and * denote the significance level at 1%, 5% and 10%, respectively. The standard errors are reported in parentheses.

. The overall effect of financial resilience on high-quality economic development remained significantly positive. Steady growth played a partial intermediary role when financial resilience affected the high-quality economic development, which corresponded to the benchmark regression conclusion; therefore, the above estimation results demonstrate a strong robustness.

4.3. Analysis of Heterogeneous Mediating Effects

4.3.1. Research on Regional Heterogeneity

We used the conventional division approach to split the provinces in the sample into three regions: the east, the center, and the west. We recognized that the mid-west regions have certain similarities in terms of their population, natural resource endowments, and economic development levels, whereas significant differences exist between the eastern and mid-west regions. Due to the special geographical environment, historical basis, and other reasons, the economic development in the mid-west regions is generally lagging behind that in the eastern region, which reflects the unbalanced and insufficient development in China. Consequently, the mid-west regions are the “short board” of high-quality development in China, and boosting economic development in the mid-west regions is a major subject worthy of in-depth consideration and careful study; therefore, we conducted a heterogeneity analysis on the eastern and mid-west regions [48,49].

Table 6. Results of intermediary effect test based on regional differences.

Variables	Eastern Region			Mid−West Region
	(1) ED	(2) Grow	(3) ED	(4) ED	(5) Grow	(6) ED
Fin	0.428 ***	5.712 ***	0.183	0.404 ***	2.171 ***	0.204 ***
	(5.14)	(4.41)	(1.34)	(14.76)	(5.01)	(3.40)
Grow			0.049 ***			0.069 ***
			(4.18)			(6.16)
InConsumption	−0.056	−0.509	−0.015	0.035 **	0.117	0.072 ***
	(−1.10)	(−0.91)	(−0.28)	(2.15)	(0.42)	(2.61)
Open	−0.038	1.182 **	−0.083 ***	0.008	0.091	−0.195
	(−1.57)	(2.10)	(−2.69)	(0.27)	(0.14)	(−1.46)
Gov	0.288	103.976 ***	−4.685 ***	−0.073	113.090 ***	−6.363 ***
	(1.43)	(46.55)	(−4.05)	(−0.17)	(38.40)	(−4.24)
InInv	0.002	−0.079	−0.007	−0.011 ***	−0.192 ***	0.012 **
	(0.11)	(−0.33)	(−0.48)	(−2.77)	(−4.34)	(2.09)
Urban	1.234	−0.382	0.724	0.437	1.031	−0.386
	(1.64)	(−0.08)	(1.13)	(1.32)	(0.40)	(−1.11)
L.ED	0.146		0.023	0.110		0.095
	(0.63)		(0.14)	(1.08)		(0.59)
L.Grow		0.071 ***			−0.086 *
		(2.65)			(−1.80)
N	110	110	110	200	200	200
AB test for AR (1)	0.091	0.047	0.108	0.024	0.030	0.076
AB test for AR (2)	0.229	0.744	0.590	0.449	0.243	0.814
Hansen test	1.000	1.000	1.000	1.000	1.000	1.000

Note: ***, ** and * denote the significance level at 1%, 5% and 10%, respectively. The standard errors are reported in parentheses.

shows the regression findings for the eastern area in columns (1)–(3) and the mid-west region in columns (4)–(6). We describe the sample regression results based on the subregions below.

(1) The total effect in the eastern region was 0.463, which was higher than the mid-west regions (0.354). This outcome demonstrates how financial resilience has a beneficial impact on high-quality economic development in the eastern region. The main reason for this outcome is that the eastern region has a high level of financial development and a strong ability to bear and absorb risks. Financial resilience can effectively counter external shocks and guide the flow of capital to the real economy, thereby promoting economic development.

(2) Comparing the intermediary effect of steady growth in the eastern and mid-west regions, we determined that the financial resilience coefficient to steady growth and the regression coefficient of steady growth to high-quality economic development in the two regions passed the 1% significance test; however, the regression coefficient of the direct effect of financial resilience on high-quality economic development in the eastern region failed the test at the 10% significance level. In this case, we performed a bootstrap test with 500 samples to confirm whether the direct effect was significant. The results showed that the coefficients were all within the 95% confidence interval regardless of whether a direct effect or mediating effect existed and was significantly positive. This result reveals that a significant partial mediating effect exists in the eastern and mid-west regions; thus, financial resilience can promote high-quality economic development by boosting steady growth.

(3) The proportion of the mediating effect between the two regions differed significantly. The mediating effect of steady growth in the eastern region accounted for about 60.5% of the total effect, which was larger than the 42.3% in the mid-west region, because regional differences exist in the natural conditions and resource endowments in China as well as an unbalanced development between regions. Thus, the steady economic growth level showed a spatial pattern of “strong in the east and weak in the west”; therefore, in the eastern region, the impact of steady growth on high-quality economic development is larger than that in the central and mid-west regions.

4.3.2. Research on Development Stage Heterogeneity

We also divided the time interval into before 2017 and after 2017 for the phased discussion according to the differences in the developmental stages. Our basis for this division was that in 2017, China first proposed that the economy should move from a high-speed growth stage to a high-quality development stage. The effect of financial resilience on high-quality economic development through steady growth will vary depending on the changes in developmental phases. Therefore, we took 2017 as the time node to analyze the difference in the mediating effect of financial resilience on high-quality economic development between the two time periods, that is, before and after 2017, in the sample period. In

Table 7. Results of intermediary effect test based on differences in developmental stages.

Variables	High-Speed Growth Stage			High-Quality Development Stage
	(1) ED	(2) Grow	(3) ED	(4) ED	(5) Grow	(6) ED
Fin	0.401 ***	2.558 ***	0.263 ***	0.464 ***	2.551 ***	0.184 ***
	(13.13)	(7.53)	(20.54)	(11.62)	(11.60)	(5.30)
Grow			0.071 ***			0.098 ***
			(11.00)			(25.18)
InConsumption	0.037 **	0.598 ***	−0.024 **	−0.039 *	−0.138 ***	−0.042 *
	(2.11)	(5.61)	(−2.52)	(−1.65)	(−4.33)	(−1.68)
Open	−0.055 ***	0.490 ***	−0.079 ***	0.027 **	0.649 ***	−0.023 ***
	(−6.56)	(5.75)	(−5.11)	(2.18)	(12.00)	(−3.40)
Gov	0.059	106.018 ***	−6.913 ***	12.183 ***	111.778 ***	1.425 ***
	(0.30)	(99.88)	(−9.67)	(78.82)	(134.23)	(2.85)
InInv	−0.018 ***	−0.340 ***	0.011 *	−0.023 ***	−0.160 ***	0.004
	(−3.87)	(−20.49)	(1.85)	(−5.72)	(−13.14)	(0.72)
Urban	0.413 ***	−1.552 *	0.530 ***	0.516 ***	−0.040	0.384 ***
	(4.57)	(−1.76)	(6.67)	(3.00)	(−0.16)	(2.81)
L.ED	0.043		0.013	−0.058 ***		−0.015
	(1.11)		(0.96)	(−3.75)		(−0.69)
L.Grow		−0.038 ***			−0.028 ***
		(−3.84)			(−3.39)
N	186	186	186	186	186	186
AB test for AR (1)	0.012	0.010	0.006	0.002	0.004	0.000
AB test for AR (2)	0.710	0.437	0.907	0.131	0.085	0.323
Hansen test	0.994	0.993	0.991	0.992	0.986	0.999

Note: ***, ** and * denote the significance level at 1%, 5% and 10%, respectively. The standard errors are reported in parentheses.

, the columns (1)–(3) and (4)–(6) give the regression findings for the high-speed development stage and the high-quality development stage, respectively. We explain the sample regression results of the different developmental stages below.

(1) In the rapid economic growth stage, the total effect of financial resilience on high-quality economic development was 0.445. Through the role of steady growth, the direct effect of financial resilience on high-quality economic development remained significantly positive at the 1% level, with its direct effect accounting for 59.2% of the total effect and mediating effect accounting for 40.8% of the total effect. This result shows that steady growth plays a partial intermediary role in the process of financial resilience affecting high-quality economic development mainly because before 2017, China pursued economic growth, but if the growth rate is too fast, then it would not be able to consider the quality of economic development. Therefore, during this period, financial resilience played a major role in the high-quality development of the economy.

(2) During the high-quality development stage, the total effect of financial resilience on high-quality economic development was 0.434. The steady growth coefficient was significantly positive at the 1% level, as was financial resilience. The above results indicate that an intermediary effect existed. Thus, steady growth plays a major intermediary role in the process of financial resilience affecting high-quality economic development, with the intermediary effect accounting for 57.6% of the total effect.

This result shows that in the high-quality development stage, financial resilience mainly affects the high-quality economic development through steady growth, which may be related to an economic downturn and slowing of growth; therefore, in this stage, maintaining a reasonable growth rate can boost high-quality economic development.

4.3.3. Research on Industrial Structure Heterogeneity

Considering that financial resilience and steady growth have different characteristics owing to differences in the industrial structure, we further divided the observed sample higher than the national average into high-end regions according to the level of the industrial structure, including Beijing, Shanghai, Tianjin, Guangdong, Jiangsu, Hainan, Zhejiang, Inner Mongolia, Chongqing, and so on. The remaining 22 provinces of China are low-end areas that are lower than the national average. The specific evaluation indicator system is shown in

Table 8. Industrial structure level evaluation indicator system.

Classification Indicators	Secondary Indicators	Measures	Type
Rational structure of production	Rationalization index of industrial structure	Theil index	+
Advanced industrial structure	Advanced index of industrial structure	Added value of tertiary industry/added value of secondary industry	+
High industrial structure	Industrial structure height index	(total output value of high-tech enterprises/regional GDP) × labor productivity	+

.

The quality of the aggregation amongst industries is referred to as the industrial structure’s rationalization. We introduce the Theil index [50,51] for the measurement, as follows:

$$\mathrm{TL}={{\displaystyle \sum }}_{\mathrm{i}=1}^{\mathrm{n}}\left(\frac{Y_i}{Y} \right)\ln \left(\frac{Y_i}{L_i}/\frac{Y}{L}\right)$$

(7)

where Y is the output value, L represents employment, i is the industry, and n denotes the number of industrial sectors. In addition, TL = 0 indicates that the economy is in equilibrium, and TL ≠ 0 indicates that the industrial structure is unreasonable.

Table 9. Results of intermediary effect test based on differences in industrial structure.

Variables	High-End Region			Low-End Region
	(1) ED	(2) Grow	(3) ED	(4) ED	(5) Grow	(6) ED
Fin	0.475 ***	5.498 ***	0.332 **	0.239 ***	1.924 ***	0.109 ***
	(2.86)	(2.86)	(2.11)	(7.95)	(8.16)	(4.15)
Grow			0.462 ***			0.108 ***
			(3.03)			(17.99)
InConsumption	−0.760	−0.332	−0.379	0.027	0.301	0.020
	(−0.95)	(−0.58)	(−0.62)	(0.88)	(1.20)	(0.89)
Open	1.399	0.854	0.778 *	−0.207	0.594 *	−0.138
	(1.04)	(0.67)	(1.66)	(−1.47)	(1.72)	(−1.11)
Gov	48.221 ***	95.619 ***	14.886	0.494 *	110.098 ***	−11.294 ***
	(8.39)	(12.57)	(0.95)	(1.94)	(45.52)	(−16.71)
InInv	0.404	−0.226	−0.083	−0.001	−0.248 ***	0.018 ***
	(0.55)	(−0.29)	(−0.08)	(−0.36)	(−5.92)	(3.75)
Urban	25.261	32.632	−25.183 *	0.213	−0.953	0.254
	(1.54)	(1.19)	(−1.71)	(0.62)	(−0.49)	(1.01)
L.ED	−0.037		0.061	0.051		0.080
	(−0.79)		(0.52)	(0.49)		(1.36)
L.Grow		0.002			−0.028
		(0.04)			(−1.24)
N	90	90	90	220	220	220
AB test for AR (1)	0.277	0.507	0.115	0.063	0.035	0.017
AB test for AR (2)	0.311	0.372	0.159	0.817	0.628	0.820
Hansen test	1.000	1.000	1.000	1.000	1.000	1.000

Note: ***, ** and * denote the significance level at 1%, 5% and 10%, respectively. The standard errors are reported in parentheses.

displays the regression findings based on variations in the industrial structure. The columns (1)–(3) report the regression results for the high-end regions of the industrial structure, and columns (4)–(6) report the regression results for the low-end regions of the industrial structure. We obtained the sample regression results based on the differences in the industrial structure.

(1) The findings in columns (1) and (4) demonstrate that the total effect was there and that both the high-end and low-end parts of the industrial structure had a positive effect of financial resilience on high-quality economic growth. The total effect of financial resilience on high-quality economic development in the high-end areas was 2.87, which was higher than the total effect of 0.317 in the low-end areas. This result shows that enhancing financial resilience can help achieve the high-quality development of the regional economy during a critical period of industrial structure transformation.

(2) We also observed differences in the mediating effect of steady growth between the two regions. In column (3), we can see that in the high-end regions of the industrial structure, the coefficient of steady growth was significantly positive at the 1% level, and the financial resilience coefficient was positive. This result indicates the existence of a mediating effect, and the mediating effect of steady growth accounted for 88.5% of the total effect. In the low-end regions of the industrial structure, steady growth had an intermediary effect on the process of financial resilience promoting high-quality economic development, accounting for 65.5% of the total effect, which was lower than the abovementioned 88.5%. This finding shows that the mediating effect of steady growth in the high-end areas of the industrial structure is large.

(3) In general, the impact of financial resilience and steady growth on high-quality economic development was highly pronounced in the high-end areas of the industrial structure. The main reason for this outcome is that improvement of the industrial structure will inevitably require the innovation of financial services and an enhancement of financial resilience, such as the expansion of the demand for derivative financial products, risk aversion, and so on, and for strong industrial strength as support. Therefore, in the high-end areas of the industrial structure, a sound industrial system will make it easy for financial resilience and steady growth to boost the coordinated development of the economy and further improve the quality of economic development.

5. Conclusions and Policy Recommendations

5.1. Conclusions

Using China’s provincial panel data from 2009 to 2020, this paper measures the level of high-quality economic development and financial resilience in various regions with the help of the entropy weight method. Based on the analysis of the mechanism of financial resilience acting on high-quality economic development, it uses the System-GMM estimation method to demonstrate the impact of financial resilience on high-quality economic growth through the intermediary variable of steady growth. We present our conclusions below.

1. Overall, financial resilience is critical to achieving high-quality economic development. Steady growth also plays a function as an intermediate.

2. According to the results of the regional regression, the financial resilience of the eastern and mid-west regions has a positive effect on high-quality economic development, but it is more pronounced in the eastern region. There are regional differences in the magnitude of the intermediary effect of steady growth as well.

3. In terms of the developmental stages, while the intermediary effect of steady economic growth may be seen mostly in the high-quality development stage, the influence of financial resilience on high-quality economic development can be seen primarily in the high-speed economic growth stage.

4. Financial resilience has some intermediary impacts on high-quality economic development, whether in the high-end or low-end sections of the industrial structure, but the intermediary effect of steady growth is more noticeable in the high-end areas of the industrial structure.

Therefore, enhancing financial resilience and maintaining steady growth are effective ways to foster the economy’s quality development in China. Different regions should adopt policies and methods that are appropriate to the economic and financial level of a region to achieve the coordinated development of all regions, thus, bringing about effective improvements in the quality of China’s economy and reasonable growth in quantity.

5.2. Policy Recommendations

1. The government should increase the financial system’s capacity to support the actual economy. Financial resilience is closely related to the performance and development of the real economy. The lack of resilience of the financial system can easily lead to a divergence in finance and entities under shock, which will seriously affect the development of the real economy. In addition, as China faces an economic downturn, the crisis and predicament of the real economy may backfire on the financial system. Therefore, to enhance financial resilience, we should improve the financial services system, focus on solving the dilemma of high financing costs for the market players, and guide financial institutions to increase support for the real economy. Specifically, strengthening the support for private enterprises and technological innovation is necessary. The government should direct funds toward the underdeveloped regions and advantageous industries to strengthen the deep connection between financial capital and the real economy.

2. The government should encourage a supply-side structural transformation in the financial sector. After high-quality development was proposed in 2017, the positive mediating effect of steady growth became significant. On the one hand, promoting the internal stability of economic operations by promoting the structural reform of the financial supply side is necessary. On the other hand, it is equally important to improve the quality and efficiency of the financial supply, so as to achieve the dual effect of steadily improving the quality and quantity of economic development.

3. Local governments should identify regional differences and explore the innovative integration of technology and finance. Due to different geographical locations and industrial structure levels, there are differences in financial resilience. On the one hand, we should strengthen the innovation-driven development of the mid-west regions and the low-end areas of the industrial structure. In such regions, focusing on technological innovation in the financial field and enhancing the core competitiveness of fintech are necessary by continuously hastening the digital transformation process and encouraging the diversification of the banking industry, thereby enhancing financial resilience. On the other hand, such regions should speed up the informatization of their financial infrastructure to explore economic development methods that are in line with their regional resource endowments.

6. Limitations and Future Work

This work exclusively analyzes the one-way link between financial resilience and high-quality economic development, as well as the intermediate function of steady growth; however, it did not conversely investigate the effect of high-quality economic development and steady growth on financial resilience. In future research, we should keep looking at how the real economy’s slump and erratic economic development affect financial resilience. Furthermore, this paper only discusses Chinese data and lacks an international perspective. To determine if the findings of this research are generally applicable, we will investigate the connection between financial resilience and sustainable development in other nations and areas.