Abstract: Based in China’s 1995-2013 provincial panel data, this paper examines the relationship between the level of financial development and returnees reflux knowledge spillovers. The results showed that: the linkages of returnees reflux knowledge spillovers with technological progress significant depends on financial development levels of provinces. Only when financial development level over a certain threshold, Returnees reflux will have a significant effect of technological progress to home country. When the level of financial development over the second threshold value, eastern, central and western regions of returnees reflux to technological progress have a positive effect. And returnees in eastern, its knowledge spillover obvious “accelerated, jumped” positive effect, But the western regions, returnees reflux knowledge spillovers is relatively limited.Restrict by the financial development threshold level, the relatively low level of financial development in China’s provinces still cannot provide the necessary financial environment support to release more returnees knowledge spillovers.

Key words: returnees reflux, knowledge spillovers, financial market efficiency, threshold effect