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Bank Concentration and Firms' Debt Structure: Evidence from China

Author

Listed:
  • Peisen Liu

    (School of Economics and Business Administration, Chongqing University
    Department of Economics, National University of Singapore)

  • Shoujun Huang

    (Lingnan (University) College, SunYat-sen University)

  • Houjian Li

    (College of Management, Sichuan Agricultural University)

Abstract

The argument on the puzzling relationship between bank concentration and firms' debt structure in China remains inconclusive as the effects of firm ownership competition and firm size competition are intertwined in the existing research. This article utilizes the market shares of Big Four state-owned banks to investigate whether bank concentration affects debt structure in China. The results show that bank concentration has a stronger positive effect on debt maturity for state-owned enterprises and large-sized enterprises. The effect of bank concentration on debt maturity strengthens with firm state ownership and firm size. Moreover, state-owned enterprises and large-sized enterprises are associated with a longer debt maturity compared to non-state-owned enterprises and small and medium-sized enterprises, respectively. These results reveal that privatizing state-owned banks and state-owned enterprises would be an effective way to reduce credit discrimination and relieve the capital constraints of non-state-owned enterprises and small and medium-sized enterprises.

Suggested Citation

  • Peisen Liu & Shoujun Huang & Houjian Li, 2018. "Bank Concentration and Firms' Debt Structure: Evidence from China," Annals of Economics and Finance, Society for AEF, vol. 19(1), pages 213-227, May.
    • Handle: RePEc:cuf:journl:y:2018:v:19:i:1:liu:huang:li
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    References listed on IDEAS

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    Cited by:

    1. Hong Zhuang & Haiyan Yin & Miao Wang & Jiawen Yang, 2019. "Bank Efficiency and Regional Economic Growth: Evidence from China," Annals of Economics and Finance, Society for AEF, vol. 20(2), pages 661-689, November.

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    More about this item

    Keywords

    bank concentration; state ownership; firm size; debt structure;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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