The Financial Density and Improvement of Urban Technological Efficiency: An Estimation Based on the Stochastic Frontier Approach

Round 1

Reviewer 1 Report (New Reviewer)

The paper does a good job of empirically estimating the effects of financial density on productivity. The general principle that agglomeration economies increase productivity, not only in finance but in all areas of production, is well-known, and this paper contributes more evidence to support that conclusion.

That being the case, the paper does not do a good job of linking its key ideas to the literature on agglomeration economies. The paper would be stronger if it started with that idea--agglomeration economies--and presented its results as an application.

There is an extensive literature on agglomeration economies--too extensive to list here. Look at this literature review https://research.upjohn.org/cgi/viewcontent.cgi?article=1256&context=reports for some references. The Krugman article, for example, is likely responsible for his Nobel prize, and the article by Ellison, Glaeser, and Kerr is another article that could be cited. Look through that literature. This paper has a greater chance of being noticed if it links to that extensive literature on agglomeration economies.

The quality of English is acceptable. The writing is sometimes convoluted, but it does not have grammatical errors or obvious phrasing from non-native English speakers.

Author Response

Please see the attachment.

Author Response File: Author Response.docx

Reviewer 2 Report (New Reviewer)

 

Dear authors, there is relevance in relating the impact of financial density on technological efficiency at the urban (city) level of a emerging economy through the application of the stochastic frontier method and the principles of looking forward and looking backward, these being the main contributions of the study.

I see opportunities for improvement, citing some considerations below:

The introduction could provide an overview and the main gaps on the themes "financial density" and "urban technological efficiency" before directing the arguments to the Chinese context, in order to highlight the relevance of the study to the scientific literature, or even for the broader context of emerging countries. Only one study is cited, which makes the introductory text unscientific. It would also be interesting to introduce why the SFA method was chosen over others. Besides the theoretical contributions, what would be the practical contributions of the study?

The division between sections 2 and 3 does not seem to be appropriate, since both refer to the scientific literature used as a basis. As for section 2, with the exception of the quotation [17] (line 120), the others turn to the Chinese context (here, it can be applied the considerations made about the introduction).  Section 3, which seems to be a justification for the use of the variable "financial density", can be summarized. The text of this section contains few citations and long paragraphs. The various constructs presented do not seem to be part of the discussions of the results achieved (they are taken up in the first lines of the conclusion, but these conclusions do not seem to be inferences from the results presented previously).

Section 4 could also be simplified. Example: summarize lines 310 to 330, focusing only on the method used on the "fixed capital stock" data.

In section 6, some methodological information presented should have preceded the results.

In section 7, rather than summarizing the results, it is interesting to highlight | detail the practical and theoretical implications of the study, its limitations and possible research sequences.

In addition to the considerations on theoretical background mentioned, in general, I believe that a rearrangement of the article sections, explaining the literature | theoretical framework, followed by the methodological design and, subsequently, the results, discussion and conclusions, can contribute to a better understanding of the study. It is also interesting to review the english, the citation and referencing pattern.

 

Author Response

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Author Response File: Author Response.docx

Reviewer 3 Report (New Reviewer)

This paper introduces the financial density perspective to measure the technical efficiency (TE) of 272 cities in China from 2005 to 2018 using different methods and approaches. That can be interesting if it reveals to be better than the GDP or per capita GDP. But the paper doesn’t prove it.

Despite the paper being well-conceived, well-structured, and methodologically consistent, the main subject is economical and financial and from my point of view is not suitable for Land Journal.

The main paper's weakness is the absence of a comparison between the results obtained in this approach and those provided by the GDP or per capita GDP use. It means, if the results obtained by GDP or per capita GDP with the geographic base were the same, what is the contribution of this paper to the knowledge, apart from an economical-financial exercise?

A map of PR China also must be added in section 5 to better understand subsections 5.2 and 5.3 and section 6.   

Minor improvements:

Keywords: Please replace the keywords “looking backward” and “looking forward” respectively with “backward-looking” and “forward-looking”

Keywords: Please add “Cities of PR of China” or “PR of China”

Line 89: Please replace “time t and t+1” with “time t+1 and t”

Figures 4 and 5: Please improve it by adding the map of China.

Line 599: Please replace “…crisis (Figure 8).” with “…crisis (Figure 7).”

 

References: many references are missing (e.g. Reinsdorf and Cover (line 324); CEIC, WIND, Urban Statistical Yearbook of China, China Provincial Marketization Index Report and the National Bureau of Statistics (lines 333-334); China Urban Statistical Yearbook (lines 349-350); China Research Data Services Platform (line 358), etc.)

Author Response

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Author Response File: Author Response.docx

This manuscript is a resubmission of an earlier submission. The following is a list of the peer review reports and author responses from that submission.

Round 1

Reviewer 1 Report

About the submission with the title "Financial Density and Improvement of Urban Technological Efficiency - An Estimation Based on the Stochastic Frontier Approach" I have the following comments:

 

I suggest that the authors clarify in the abstract and introduction section the main motivations, gaps in the literature that justify the study, objectives, methodologies, novelties and main insights.

 

The literature review could be significantly improved, because there are many studies about these topics related with the efficiency. For example, some benchmark with DEA approaches and Malmquist index is missing.

 

On the other hand, there is some confusion in the use of some concepts, such as, for example, "agglomeration" and "spatial distribution". I must remember that the "agglomeration" concept is usually used by the New Economic Geography and has complex developments behind. About "spatial distribution" I suggest to consider the developments of Anselin about spatial autocorrelation.The same about the concept of "clusters". I suggest to improve the explanations about the several tables and figures presented.

 

A discussion section is missing. The conclusions section needs to be improved with clear practical implications, policy recommendations and future research.