Bank competition and firms’ maturity mismatch puzzle: Evidence from a right-tail average effect model

This study examines the impact of bank competition on firms’ asset–debt maturity mismatches, particularly for high-risk firms that heavily rely on short-term debt for long-term investments. We introduce a right-tail average effect model to better capture heterogeneous responses compared to traditional average-effect methods, offering fresh insights into how bank competition affects firms with severe mismatches. Using data on bank branch distributions and Chinese listed firms, we find that increased bank competition significantly reduces maturity mismatches, with the strongest effects among firms with the most severe imbalances. Mechanism analysis reveals that competition improves information acquisition and optimizes credit maturity structures. These findings highlight the role of bank competition in mitigating financial fragility and provide implications for credit market regulation and systemic risk management.