Banking Competition and Firms’ Innovation:Empirical Evidence from Chinese Industrial Enterprises Database
CAI Jing, DONG Yan
School of Accounting, Southwestern University of Finance and Economics; Research Institute of Economics and Management, Southwestern University of Finance and Economics
Abstract:
According to the layout of commercial banks’ branches in cities issued by China Banking Regulatory Commission, this paper empirically investigates the effect of banking competition on firms’ innovation by using a large sample of Chinese industrial enterprises database from year 2005 to 2007. We find that a higher degree of banking competition will bring more innovation activities of enterprises, especially for small and medium enterprises (SMEs). Meanwhile, compared to the state-owned commercial banks and city commercial banks, joint-stock commercial banks play a more important role in encouraging firms’ innovation. This paper enriches the research related to the effect of banking structure on the innovation activities of firms, and provides basis for supporting the balanced regional development of financial markets.
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