The local financial system has become an important part of China's financial industry to improve its standard of service for the real economy. It's the core meaning to promote the sustainable and healthy development of the local financial system for holding fast to the bottom line of no systemic financial risk. A clear connation for a local financial system was endowed, and then its essential characteristics accompanied the evolution and its status of being under the theoretical framework of nationalism were overlooked. From the perspective of nationalism theory, the evolution of the local financial system is a process which can be considered as bursting with mutual substitution between the central-local competition for financial resource allocation right and the centralization of financial management authority, and also a process in which the market financial system can be establishment, frustration, and its remodeling. Throughout this process, it's exposure both the ambiguity and dislocation of regulators, and the status of being as crutch of the local financial system. As the best optimal financial structure for economic growth, the scale boundary of local financial system is nailed to an intersection point between the financial institutional demand caused by local economic growth expansion and the tolerance of the national top regulatory authority to the risk radiation of the local financial system. In extreme cases, a corner solution would be generated. The last ten-years evolution of the local financial system can be seen as an experiment of systematic reform. Currently, this exploration is undergoing a phase of structural adjustment and high-quality reconstruction. Its system remodeling or reconstruction, on one hand, relies on the ecological restoration of the social credit system, on the other hand, depends on the establishment and perfection of the specialized regulatory system.