|
|
|
| Bank Competition, Policy Incentives and SME Lending: Evidence from County-level Financial Institutions in China |
| BIAN Wenlong, SHEN Yan, SHEN Minggao
|
School of Finance, Guangdong University of Foreign Studies;
National School of Development, Peking University; Caixin Group |
|
|
|
|
Abstract Small and medium-sized enterprises are playing an important part in improving the transition and development of China’s economy, however, they do not get enough financing from banks. Based on all financial institutions in 90 counties of 14 provinces from 2005 to 2013, this paper investigates the effect of bank competition on SME lending and offers a new perspective combined with government policies and incentive arrangements. Our findings show that the decrease of market concentration does not lead to the increase of market competition in terms of pricing capability and elasticity of profits to marginal cost, which has a positive effect on SME lending. According to this detailed survey data, we suggest regulatory authorities relax the limitation on the access of the banking industry, increase the elasticity of loan interest rate, accelerate the write-off of non-performing loans, and deepen the reforms of banks’ incentive mechanism, which improves the transition of banks from passive lending to active lending.
|
|
Received: 20 August 2016
Published: 18 January 2018
|
|
|
|
|
| [1] |
姚耀军、董钢锋,2014,《中小银行发展与中小企业融资约束——新结构经济学最优金融结构理论视角下的经验研究》,《财经研究》第1期,第105~115页。
|
| [2] |
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。
|
| [3] |
Agostino, M., and F. Trivieri. 2008. “Bank Competition and SMEs Bank Financing: Evidence from the Italian Provinces.” Journal of Industry, Competition and Trade,8, 33-53.
|
|
Agostino, M., and F. Trivieri. 2008. “Bank Competition and SMEs Bank Financing: Evidence from the Italian Provinces.” Journal of Industry, Competition and Trade,8, 33-53.
|
| [4] |
Angelini, P., and N. Cetorelli. 2003. “The Effects of Regulatory Reform on Competition in the Banking Industry.” Journal of Money, Credit and Banking,35, 663-684.
|
|
Angelini, P., and N. Cetorelli. 2003. “The Effects of Regulatory Reform on Competition in the Banking Industry.” Journal of Money, Credit and Banking,35, 663-684.
|
| [5] |
Barth, J.R., Lin, C., Lin, P., and F. M. Song. 2009. “Corruption in Bank Lending to Firms: Cross-country Micro Evidence on the Beneficial Role of Competition and Information Sharing.” Journal of Financial Economics, 91, 361-388.
|
|
Barth, J.R., Lin, C., Lin, P., and F. M. Song. 2009. “Corruption in Bank Lending to Firms: Cross-country Micro Evidence on the Beneficial Role of Competition and Information Sharing.” Journal of Financial Economics, 91, 361-388.
|
| [6] |
Baumol, W. J., Panzar, J. C., and R. D. Willig. 1982. “Constestable Markets and the Theory of Industry Structure.” Harcourt Brace Jovanovich, New York.
|
|
Baumol, W. J., Panzar, J. C., and R. D. Willig. 1982. “Constestable Markets and the Theory of Industry Structure.” Harcourt Brace Jovanovich, New York.
|
| [7] |
Beck, T., Demirguc-Kunt, A., and M. S. Martinez Peria. 2011. “Bank Financing for SMEs: Evidence across Countries and Bank Ownership Types.” Journal of Financial Services Research,39, 35-54.
|
|
Beck, T., Demirguc-Kunt, A., and M. S. Martinez Peria. 2011. “Bank Financing for SMEs: Evidence across Countries and Bank Ownership Types.” Journal of Financial Services Research,39, 35-54.
|
| [8] |
Benfratello, L., Schiantarelli, F., and A. Sembenelli. 2006. “Banks and Innovation: Microeconometric Evidence on Italian Firms.” IZA Discussion Paper No. 2032.
|
|
Benfratello, L., Schiantarelli, F., and A. Sembenelli. 2006. “Banks and Innovation: Microeconometric Evidence on Italian Firms.” IZA Discussion Paper No. 2032.
|
| [9] |
Berger, A. N., and T. H. Hannan. 1998. “The Efficiency Cost of Market Power in the Banking Industry: A Test of the ‘Quiet Life’ and Related Hypotheses.” The Review of Economics and Statistics, 80, 454-465.
|
|
Berger, A. N., and T. H. Hannan. 1998. “The Efficiency Cost of Market Power in the Banking Industry: A Test of the ‘Quiet Life’ and Related Hypotheses.” The Review of Economics and Statistics, 80, 454-465.
|
| [10] |
Berger, A. N., and G. F. Udell. 1995. “Relationship Lending and Lines of Credit in Small Firm Finance.” Journal of Business, 68, 351-382.
|
|
Berger, A. N., and G. F. Udell. 1995. “Relationship Lending and Lines of Credit in Small Firm Finance.” Journal of Business, 68, 351-382.
|
| [11] |
Berger, A. N., and G. F. Udell. 2002. “Small Business Credit Availability and Relationship Lending: The Importance of Bank Organizational Structure.” Economic Journal, 112, 32-53.
|
|
Berger, A. N., and G. F. Udell. 2002. “Small Business Credit Availability and Relationship Lending: The Importance of Bank Organizational Structure.” Economic Journal, 112, 32-53.
|
| [12] |
Bonacorrisi di Patti, E., and G. Gobbi. 2001. “The Changing Structure of Local Credit Markets: Are Small Businesses Special?” Journal of Banking & Finance,25, 2209-2237.
|
|
Bonacorrisi di Patti, E., and G. Gobbi. 2001. “The Changing Structure of Local Credit Markets: Are Small Businesses Special?” Journal of Banking & Finance,25, 2209-2237.
|
| [13] |
Boone, J. 2008. “A New Way to Measure Competition.” The Economic Journal,118, 1245-1261.
|
|
Boone, J. 2008. “A New Way to Measure Competition.” The Economic Journal,118, 1245-1261.
|
| [14] |
Carbo-Valverde, S., Rodriquez-Fernandez, F., and G. F. Udell. 2009. “Bank Market Power and SME Financing Constraints.” Review of Finance,13, 309-340.
|
|
Carbo-Valverde, S., Rodriquez-Fernandez, F., and G. F. Udell. 2009. “Bank Market Power and SME Financing Constraints.” Review of Finance,13, 309-340.
|
| [15] |
Chong, T., Lu, L., and S. Ongena. 2013. “Does Banking Competition Alleviate or Worsen Credit Constraints Faced by Small- and Medium-sized Enterprises? Evidence from China.” Journal of Banking & Finance,37, 3412-3424.
|
|
Chong, T., Lu, L., and S. Ongena. 2013. “Does Banking Competition Alleviate or Worsen Credit Constraints Faced by Small- and Medium-sized Enterprises? Evidence from China.” Journal of Banking & Finance,37, 3412-3424.
|
| [16] |
Fungacova, Z., Pessarossi, P., and L. Weill. 2013. “Is Bank Competition Detrimental to Efficiency? Evidence from China.” China Economic Review ,27, 121-134.
|
|
Fungacova, Z., Pessarossi, P., and L. Weill. 2013. “Is Bank Competition Detrimental to Efficiency? Evidence from China.” China Economic Review ,27, 121-134.
|
| [17] |
Lerner, A. 1934. “The Concept of Monopoly and the Measurement of Monopoly Power.” Review of Economic Studies, 1, 157-175.
|
|
Lerner, A. 1934. “The Concept of Monopoly and the Measurement of Monopoly Power.” Review of Economic Studies, 1, 157-175.
|
| [18] |
Leuvensteijn, M., Bikker, J. A., Rixtel, A., and C. K. Sorensen. 2011. “A New Approach to Measuring Competition in the Loan Markets of the Euro Area.” Applied Economics ,43, 3155-3167.
|
|
Leuvensteijn, M., Bikker, J. A., Rixtel, A., and C. K. Sorensen. 2011. “A New Approach to Measuring Competition in the Loan Markets of the Euro Area.” Applied Economics ,43, 3155-3167.
|
| [19] |
Lloyd-Williams, D. M., Molyneux, P., and J. Thornton. 1994. “Market Structure and Performance in Spanish Banking.”Journal of Banking & Finance,18, 433-443.
|
|
Lloyd-Williams, D. M., Molyneux, P., and J. Thornton. 1994. “Market Structure and Performance in Spanish Banking.”Journal of Banking & Finance,18, 433-443.
|
| [20] |
Mercieca, S., Schaeck, K., and S. Wolfe. 2009. “Bank Market Structure, Competition, and SME Financing Relationships in European Regions.”Journal of Financial Services Research, 36, 137-155.
|
|
Mercieca, S., Schaeck, K., and S. Wolfe. 2009. “Bank Market Structure, Competition, and SME Financing Relationships in European Regions.”Journal of Financial Services Research, 36, 137-155.
|
| [21] |
Molyneux, P., Thornton, J., and D. M. Lloyd-Williams. 1996. “Competition and Market Contestability in Japanese Commercial Banking.” Journal of Economics and Business, 48, 33-45.
|
|
Molyneux, P., Thornton, J., and D. M. Lloyd-Williams. 1996. “Competition and Market Contestability in Japanese Commercial Banking.” Journal of Economics and Business, 48, 33-45.
|
| [22] |
Panzar, J. C., and J. N. Roose. 1987. “Testing for “Monopoly” Equilibrium.” The Journal of Industrial Economics, 35, 443-456.
|
|
Panzar, J. C., and J. N. Roose. 1987. “Testing for “Monopoly” Equilibrium.” The Journal of Industrial Economics, 35, 443-456.
|
| [23] |
Papke, L. E., and J. M Wooldridge. 1996. “Econometric Method for Fractional Response Variables with an Application to 401(k) Plan Participation Rates.” Journal of Applied Econometrics, 11, 619-632.
|
|
Papke, L. E., and J. M Wooldridge. 1996. “Econometric Method for Fractional Response Variables with an Application to 401(k) Plan Participation Rates.” Journal of Applied Econometrics, 11, 619-632.
|
| [24] |
Peek, J., and E. S. Rosengren. 1998. “Bank Consolidation and Small Business Lending: It’s not just Bank Size Matters.” Journal of Banking & Finance, 22, 799-819.
|
|
Peek, J., and E. S. Rosengren. 1998. “Bank Consolidation and Small Business Lending: It’s not just Bank Size Matters.” Journal of Banking & Finance, 22, 799-819.
|
| [25] |
Petersen, M. A., and R. G. Rajan. 1994. “The Benefits of Lending Relationships: Evidence from Small Business Data.” The Journal of Finance, 49, 3-37.
|
|
Petersen, M. A., and R. G. Rajan. 1994. “The Benefits of Lending Relationships: Evidence from Small Business Data.” The Journal of Finance, 49, 3-37.
|
| [26] |
Petersen, M. A., and R. G. Rajan. 1995. “The Effect of Credit Market Competition on Lending Relationships.” The Quarterly Journal of Economics, 110, 407-443.
|
|
Petersen, M. A., and R. G. Rajan. 1995. “The Effect of Credit Market Competition on Lending Relationships.” The Quarterly Journal of Economics, 110, 407-443.
|
| [27] |
Ryan, R. M., O’Toole, C. M., and F. McCann. 2014. “Does Bank Market Power Affect SME Financing Constraints?” Journal of Banking & Finance,49, 495-505.
|
|
Ryan, R. M., O’Toole, C. M., and F. McCann. 2014. “Does Bank Market Power Affect SME Financing Constraints?” Journal of Banking & Finance,49, 495-505.
|
| [28] |
Shaffer, S. 2004. “Patterns of Competition in Banking.” Journal of Economics & Business 56, 287-313.
|
|
Shaffer, S. 2004. “Patterns of Competition in Banking.” Journal of Economics & Business 56, 287-313.
|
| [29] |
Stiglitz, J. E., and A. Weiss. 1981. “Credit Rationing in Markets with Imperfect Information.”American Economic Review,71, 393-410.
|
|
Stiglitz, J. E., and A. Weiss. 1981. “Credit Rationing in Markets with Imperfect Information.”American Economic Review,71, 393-410.
|
| [30] |
Strahan, P. E., and J. P. Weston. 1996. “Small Business Lending and Bank Consolidation: Is There Cause for Concern?” Federal Reserve Bank of New York Current Issues. Economic and Finance, 2, 1-6.
|
|
Strahan, P. E., and J. P. Weston. 1996. “Small Business Lending and Bank Consolidation: Is There Cause for Concern?” Federal Reserve Bank of New York Current Issues. Economic and Finance, 2, 1-6.
|
| [31] |
Tabak, B. M., Fazio, D. M., and D. O. Cajueiro. 2012. “The Relationship between Banking Market Competition and Risk-taking: Do Size and Capitalization Matter?” Journal of Banking & Finance, 36, 3366-3381.
|
|
Tabak, B. M., Fazio, D. M., and D. O. Cajueiro. 2012. “The Relationship between Banking Market Competition and Risk-taking: Do Size and Capitalization Matter?” Journal of Banking & Finance, 36, 3366-3381.
|
| [32] |
De la Torre, A., Martinez Peria,M. S., and S. L. Schmukler. 2010. “Bank Involvement with SMEs: Beyond Relationship Lending.”Journal of Banking & Finance, 34, 2280-2293.
|
|
De la Torre, A., Martinez Peria,M. S., and S. L. Schmukler. 2010. “Bank Involvement with SMEs: Beyond Relationship Lending.”Journal of Banking & Finance, 34, 2280-2293.
|
| [33] |
Yuan, Y. 2006. “The State of Competition of the Chinese Banking Industry.” Journal of Asian Economics, 17, 519-534.
|
|
Yuan, Y. 2006. “The State of Competition of the Chinese Banking Industry.” Journal of Asian Economics, 17, 519-534.
|
|
|
|
