Abstract: The free flow of financial resources and financial agglomeration brings the scale effect, reduce financing costs, promote regional TFP increase, but profit driven capital also lead to the unbalanced development of the regional economy. With the increasing frequency of inter regional economic transactions, the spatial spillover effect of total factor productivity (TFP) is becoming more pronounced. Then, how financial development directly affects TFP and its spatial spillover effects is a question to ponder over. This paper through the collection of 30 regions in China, (2006-2015) of the cross section data, research on the direct effect of financial development on TFP and spillover effects, so as to optimize the financial allocation efficiency between regions. Put the TFP decomposition and constructed by the BLM index, and then study the banking agencies and the capital market to the "technical progress" and "direct and indirect effects of efficiency improvement", we find that there exists a positive direct effect on TFP, but the capital market (stocks and bonds) on regional total factor productivity spillover effect ratio of banks and other financial media is more significant, which can efficiently generate information transfer and technical disclosure and stimulate R & D on competition and catch up, further promote the balanced development of regional play. Finally, it provides policy advice and reference on how to coordinate regional financial and economic balanced development.

Key words: financial development, total factor productivity, spillover benefit