The Impact of Breaking Local Implicit Guarantees on the Risk of Small and Medium-sized Regional Banks
SHU Shaowen, CAI Qingfeng, CHEN Dong, ZOU Jingxian
School of Finance, Shanghai University of International Business and Economics; School of Economics, Xiamen University; National Academy of Development and Strategy, Renmin University of China
Summary:
For a long time, China's bond market has operated under the belief of an implicit “guarantee” for bonds issued by state-owned enterprises (SOEs), whereby investors generally expect local governments to provide implicit guarantees for the debts of local SOEs. Breaking this implicit guarantee is an essential requirement for standardizing market discipline, optimizing resource allocation, and clarifying risk attribution, holding significant positive implications for the market. However, during the dismantling of these implicit guarantees, financial risk prevention for entities with weaker risk resilience cannot be overlooked. This paper focuses on small and medium-sized banks (SMBs) as one such entity.Theoretically, the net directional impact of removing local implicit guarantees on the risk of local SMBs is ambiguous. On one hand, for SMBs and large banks coexisting within the banking system, the removal of local implicit guarantees may alter the competitive landscape between these two types of banks, potentially exacerbating the risks faced by SMBs. A relevant background is that China's banking and financial system has long maintained a tiered structure for financial service provision: large banks primarily serve SOEs and large enterprises, while SMBs focus on serving small and medium-sized enterprises (SMEs) and the private economy. The removal of implicit guarantees would significantly reduce the attractiveness of SOE credit business for large banks, an effect likely to spread strongly among SOEs. As large banks become inclined to reduce their SOE-related credit business, the traditional segmentation of the banking market is disrupted, prompting large banks to expand their services downward. This “horizontal” structural adjustment in banking operations may affect SMBs through the following channels: (1) Intensified Regional Bank Competition Effect: Increased banking competition itself can elevate bank risks, particularly for SMBs. (2) Diversion of High-Quality Clients Effect: The downward expansion of large banks may directly siphon off high-quality clients and loans originally served by local SMBs, a practice commonly referred to as “cream-skimming”, thereby worsening the asset quality of SMBs. (3) Expansion of High-Risk Business Effect: Under competitive pressure, SMBs may be forced to shift towards higher-yield, riskier business areas such as shadow banking, which are harder for large banks to enter. Beyond being affected by the “horizontal” competition and cooperation among banks, the reshaping of the relationship between local governments and SMBs will also “vertically” influence the risk level of SMBs, primarily due to the reduced intervention of the local government's “visible hand” in economic activities. However, the direction of this impact is not straightforward. This is because prior to the removal of local implicit guarantees, government intervention could have a dual effect on SMB risk. On one hand, local governments might increase SMB risk by interfering with their market-oriented operational decisions and distorting market resource allocation. On the other hand, local governments could also act as a “helping hand (or supporting hand)” for SMBs, which often have strong local ties but weaker competitiveness, thereby enhancing their risk resilience. Given these intertwined forces, determining which force ultimately dominates requires rigorous empirical analysis. Accordingly, this paper uses the first occurrence of local SOE bond defaults in various regions as a proxy for the removal of local implicit guarantees. By constructing a staggered difference-in-differences model, the study finds that the removal of local implicit guarantees significantly exacerbates risks for local SMBs. The reason is that once the belief in “implicit rigid repayment” for SOEs collapses, large banks, which originally primarily served SOEs and large enterprises, shift their business focus downward, creating competitive overlap with SMBs. This leads to intensified local competition, diversion of high-quality clients, and expansion of high-risk activities among SMBs. The paper also finds that the removal of local implicit guarantees has a certain mitigating effect on SMB risks, which may be partly attributed to the weakening of the local government's “interventionist hand” in market resource allocation. However, this risk-mitigating effect is outweighed by the risk-increasing effect. Heterogeneity analysis indicates that this risk-exacerbating effect is more pronounced in SMBs with a higher proportion of collateralized loans (high-quality loans) and weaker prudential management practices. This research not only enriches the study of risks faced by SMBs but also provides policy insights for addressing local government debt risks and preventing systematic financial risks.
舒少文, 蔡庆丰, 陈栋, 邹静娴. 地方隐性担保破除对域内中小银行风险的影响[J]. 金融研究, 2026, 550(4): 55-73.
SHU Shaowen, CAI Qingfeng, CHEN Dong, ZOU Jingxian. The Impact of Breaking Local Implicit Guarantees on the Risk of Small and Medium-sized Regional Banks. Journal of Financial Research, 2026, 550(4): 55-73.
[1] 蔡庆丰、舒少文、邹静娴和黄蕾,2025,《普惠金融竞争下的中小银行风险重构——基于大型银行业务下沉的实证发现》,《中国工业经济》第2期,第99~117页。 [2] 蔡庆丰和吴奇艳,2022,《打破“刚兑”与企业融资成本结构分化——基于国有企业债务违约的经验证据》,《经济管理》第11期,第125~147页。 [3] 董艳、谭苏航、董梦瑶和吴善辉,2023,《数字信贷对传统商业银行的影响》,《数量经济技术经济研究》第2期,第69~89页。 [4] 顾海峰和于家珺,2019,《中国经济政策不确定性与银行风险承担》,《世界经济》第11期,第148~171页。 [5] 和泽慧、路晓蒙、罗荣华和兰伟,2023,《打破刚性兑付,资金何去何从?——基于家庭资产配置的微观视角》,《经济学(季刊)》第4期,第 442~460页。 [6] 姜付秀、蔡文婧、蔡欣妮和李行天,2019,《银行竞争的微观效应:来自融资约束的经验证据》,《经济研究》第6期,第72~88页。 [7] 姜富伟、李梦如和孟令超,2024,《金融稳定沟通与银行系统性风险》,《世界经济》第10期,第 93~123页。 [8] 李建强、朱军和张淑翠,2020,《政府债务何去何从:中国财政整顿的逻辑与出路》,《管理世界》第7期,第 41~55页。 [9] 李丽雯、项后军、刘冲和李政,2025,《我国存在货币政策传导的存款渠道吗？》,《统计研究》第2期,第84~98页。 [10] 李万利、刘晓剑和许均平,2024,《中小银行网点扩张与企业信贷期限结构》,《金融研究》第6期,第114~131页。 [11] 林毅夫、孙希芳和姜烨,2009,《经济发展中的最优金融结构理论初探》,《经济研究》第8期,第4~17页。 [12] 刘畅、曹光宇和马光荣,2020,《地方政府融资平台挤出了中小企业贷款吗?》,《经济研究》第3期,第50~64页。 [13] 刘莉亚、余晶晶、杨金强和朱小能,2017,《竞争之于银行信贷结构调整是双刃剑吗?——中国利率市场化进程的微观证据》,《经济研究》第5期,第131~145页。 [14] 罗知、刘岩、陆利平和刘成,2024,《银行业对外开放与内资银行竞争和发展——兼论统筹银行业开放与安全》,《经济研究》第9期,第4~22页。 [15] 毛捷和任占尚,2025,《地方债的稳就业效应:来自中小银行专项债的证据》,《数量经济技术经济研究》第3期,第26~46页。 [16] 倪骁然、黄琨皓、彭俞超和韩晗,2024,《结构性减税与企业债务结构调整:兼议财政政策的事前金融风险治理效应》,《中国工业经济》第7期,第124~141页。 [17] 邵鹏程、王励晴和吴昕扬,2024,《地方中小银行专项债的政策效果评估——基于中小银行风险和盈利能力视角的分析》,《财政研究》第6期,第115~128页。 [18] 宋科、郭一鸣和徐蕾,2024,《银行数字化转型存在“马太效应”吗——基于银行功能的经验阐释》,《中国工业经济》第12期,第62~79页。 [19] 王昌林、李扬、吴晓求、黄益平、张晓晶和吴卫星,2023,《推动金融高质量发展加快建设金融强国——学习贯彻中央金融工作会议精神专家笔谈》,《金融评论》第6期,第1~22+122页。 [20] 王辉和梁俊豪,2020,《基于动态因子Copula模型的我国银行系统性风险度量》,《金融研究》第11期,第58~79页。 [21] 王茹婷、彭方平、李维和王春丽,2022,《打破刚性兑付能降低企业融资成本吗？》,《管理世界》第4期,第42~64页。 [22] 吴晗和段文斌,2015,《银行业市场结构、融资依赖与中国制造业企业进入——最优金融结构理论视角下的经验分析》,《财贸经济》第5期,第72~83页。 [23] 吴晓求,2015,《互联网金融:成长的逻辑》,《财贸经济》第2期,第5~15页。 [24] 夏俊杰、邓尚沅和徐铭梽,2024,《中小企业发展与银行结构——基于进出口经营权改革的经验研究》,《金融研究》第11期,第76~93页。 [25] 夏文珂、刘冲和刘莉亚,2025,《宏观审慎政策与商业银行风险承担——基于宏观情景压力测试的实证研究》,《管理科学学报》第7期,第173~190页。 [26] 徐璐和叶光亮,2022,《存款保险、市场竞争与银行经营稳健性》,《金融研究》第1期,第115~134页。 [27] 张鹏东、潘越、陈思岑和肖金利,2022,《打破刚兑、债券利率市场化与企业研发决策》,《管理科学学报》第8期,第63~81页。 [28] 张雪兰和何德旭,2016,《次贷危机之后全球金融监管改革的趋势与挑战》,《国外社会科学》第1期,第94~113页。 [29] 赵旭霞和田国强,2024,《地方政府债务扩张、杠杆率监管压力与影子银行》,《经济研究》第2期,第42~58页。 [30] 钟宁桦、陈姗姗、马惠娴和王姝晶,2021,《地方融资平台债务风险的演化——基于对“隐性担保”预期的测度》,《中国工业经济》第4期,第5~23页。 [31] 周颖刚、潘骏和刘岩,2025,《商业银行股权结构特征与银行系统脆弱性水平》,《金融研究》第2期,第39~57页。 [32] 祝小全、陈卓、徐同和何治国,2025,《地方政府隐性担保如何影响中小银行实时的信用风险？》,《金融研究》第2期,第76~94页。 [33] Allen, F., J, Qian., and M. Qian, 2005, “Law, Finance, and Economic Growth in China”, Journal of Financial Economics, 77(1), pp. 57~116. [34] Caballero, R. J., T. Hoshi. and A. K. Kashyap, 2008, “Zombie Lending and Depressed Restructuring in Japan”, The American Economic Review, 98 (5), pp.1943~1977. [35] Cengiz, D., A. Dube., A. Lindner and B. Zipperer, 2019, “The Effect of Minimum Wages on Low-Wage Jobs”, The Quarterly Journal of Economics, 134(3), pp. 1405~1454. [36] Chaney, T.,D. Sraer and D. Thesmar, 2012, “The Collateral Channel: How Real Estate Shocks Affect Corporate Investment”, American Economic Review, 102(6), pp. 2381~2409. [37] Clarke, G. R. G., R. Cull. and M. Shirley, 2005, “Bank Privatization in Developing Countries: A Summary of Lessons and Findings”, Journal of Banking and Finance, 29(8-9), pp. 1905~1930. [38] Cong, L. W.,H. Gao., J. Ponticelli. and X. Yang, 2019, “Credit Allocation under Economic Stimulus: Evidence from China”, Review of Financial Studies, 32(9), pp. 3412~3460. [39] Dong, Y.,C. Meng., M. Firth. and W. Hou, 2014, “Ownership Structure and Risk-taking: Comparative Evidence from Private and State-controlled Banks in China”, International Review of Financial Analysis, 36, pp.120~130. [40] Ferrara E. L.,A. Chong. and S. Duryea, 2012, “Soap Operas and Fertility: Evidence from Brazil”, American Economic Journal: Applied Economics, 4(4), pp. 1~31. [41] Fukuda, S. I. and J. L. Nakamura, 2011, “Why did Zombie Firms Recover in Japan?”, The World Economy, 34 (7), pp. 1124~1137. [42] Giannetti, M. and A. Simonov, 2013, “On the Real Effects of Bank Bailouts: Micro Evidence from Japan”, American Economic Journal: Macroeconomics, 5(1), pp.135~167. [43] Hoshi, T, 2006, “Economics of the Living Dead”, The Japanese Economic Review, (1), pp.30~49. [44] Huang, Y., M. Pagano. and U. Panizza, 2020, “Local Crowding-Out in China”, The Journal of Finance, 75(6), pp. 2855~2898 [45] Jin, S.,W. Wang. and Z. Zhang, 2023, “The Real Effects of Implicit Government Guarantee: Evidence from Chinese State-owned Enterprise Defaults”, Management Science, 69(6), pp. 3650~3674. [46] Rice, T. and P. E. Strahan, 2010, “Does Credit Competition Affect Small-firm Finance?”, Journal of Finance, 65(3), pp. 861~889. [47] Song, Z.,K. Storesletten. and F. Zilibotti, 2011, “Growing like China”, American Economic Review, 101(1), pp. 196~233. [48] Tan, Y.,Y. P. Huang and W. T. Woo, 2016, “Zombie Firms and the Crowding-out of Private Investment in China”, Asian Economic Papers, 15(3), pp. 32~55.
