Abstract: Financial agglomeration works as a powerful force driving the technical progress. Its establishment and development are deeply affected by the government. This paper expounds how government intervention affects the technical progress effect of financial agglomeration, summarizes its mechanism, and makes empirical tests using both static and dynamic panel models. Results show that China's financial agglomeration has a significant and steady upward trend, however, only when the government factor is added, can the partial effect of financial agglomeration to technical progress be positive, meanwhile its promoting effect weakens over time. Sub-index regression results show that, different from the positive effects of administrative market entry barriers, labor mobility control and financial suppression, the expansion of government spending scale fails to improve the technical effect of financial agglomeration. Sub-sample regression in terms of different regions reveals that government intervention shows more positively and potentially in the middle and east regions with lower degree of government intervention. This would help to provide a useful reference for a reasonably government force and financial agglomeration.

Key words: government intervention, financial agglomeration, regional technical progress