An Empirical Study On The Impact And Mechanisms Of Bank Competition On The Green Development Of Enterprises

In the past 40 years,the Chinese banking system has experienced incremental reform,stock reform and substantial expansion of bank branches.After these reforms,the competition in the banking sector has been increased sharply.These reforms in the banking system have met the needs of economic development and corporate financing.In the rapid development in China,there are increasing concerns about the environmental problems,such as public awareness,enterprises’ actions,and government regulations.An important question is whether increasing competition in the banking sector can promote the transformation of enterprises to green development.Few studies have explored this issue.However,the emerging green finance policies in recent years have affirmed the responsibilities of banks in promoting environmental protection.As a key indicator to measure the changes caused by banking reforms,the role of bank competition in green and sustainable development needs to be studied urgently.Based on the above background,this paper empirically tests the impact of bank competition on the green development of enterprises from the perspective of pollutant emissions,green innovation and green total factor productivity.This paper firstly describes the research background,significance,content and innovations.Secondly,it introduces the theories related to this paper,including the financial structure theory,market structure theory,geographical economic theory,information hypothesis and market power hypothesis,asymmetric information theory,pecking order theory,the negative externality of environmental pollution,and Porter Hypothesis;and reviews the related literature about bank competition,green development of enterprises,bank competition affects green development of enterprises.Thirdly,it summarizes the development of China’s banking industry,introduces the method of measuring bank competition,and shows the changes of bank competition in different stages of banking development.Then,it empirically analyzes the impact of bank competition on enterprise green development,and discusses the role of environmental regulation and green credit policy in the impact of bank competition on enterprise green development.Finally,it concludes this research,proposes policy implications and points out some deficiencies in the research process and directions of future studies.The empirical research of this paper focuses on the following four aspects.(1)By matching China’s Annual Surveys of Industrial Enterprises dataset with the Industrial Enterprise Pollution dataset,this paper empirically tests the total effect,abatement effect and scale effect of bank competition on the enterprises’ pollution reduction.The empirical results show that increasing bank competition reduces enterprises’ total pollutant emissions and pollutant emissions per unit output value,but has no effect on enterprises’ output value.In other words,bank competition has a total effect and abatement effect,but no scale effect on enterprises’ pollution reduction.Bank competition affects enterprises’ pollution reduction mainly through financing mechanism,increasing the purchase of pollution control facilities and credit resource allocation mechanism.The proportion of local commercial banks’ branches strengthens the restraining effect of banking competition on enterprises’ pollutant emissions,and the number of local commercial banks’ and joint-stock commercial banks’ branches has a significant negative impact on enterprises’ pollutant emissions.(2)By combining the Annual Surveys of Industrial Enterprises dataset,patent dataset and the IPC Green Inventory developed by the World Intellectual Property Organization,this paper analyzes the impact of bank competition on the green innovation of enterprises and its underlying mechanisms,and investigates the heterogeneity influence of different types of banks.The empirical results indicate that the intensified competition in the banking sector promotes enterprises’ green patent applications.Easing Financing constraints,improving credit allocation and increasing the share of intangible assets are the channels through which bank competition affects enterprises’ green innovation.The proportion of joint-stock commercial banks’ branches significantly increases the facilitating effect of bank competition on enterprises’ green innovation,and the number of joint-stock commercial banks’ branches has a significant positive impact on enterprises’ green innovation.(3)Employing the Annual Surveys of Industrial Enterprises dataset and the Industrial Enterprise Pollution dataset,this paper calculates enterprises’ green total factor productivity(TFP)by considering energy input and unexpected output,and analyzes the impact of bank competition on enterprises’ green TFP and its underlying mechanism.Further,the heterogeneity influence of different types of banks is discussed.The empirical results suggest that bank competition has a significant role in promoting enterprises’ green TFP.Bank competition affects enterprises’ green TFP mainly through the financing mechanism and credit resource allocation mechanism.The proportion of joint-stock commercial banks’ branches and the proportion of foreign banks’ branches significantly strengthen the promotion of bank competition on enterprises’ green TFP.The number of foreign banks’ branches has a significant positive effect on enterprises’ green TFP.(4)As environmental regulation and green credit policy are two main means to guide enterprises towards green development in China,this paper further explores the impact of environmental regulation intensity and green credit policy on the relationship between bank competition and green development of enterprises.The empirical results present that there is a threshold effect of environmental regulation and a mixed effect of green credit policy on the relationship between bank competition and enterprises’ green development.Collectively,a certain degree of environmental regulation intensity strengthens the positive impact of bank competition on the green development of enterprises;the green credit policy significantly strengthens the inhibiting effect of bank competition on enterprises’ pollutant emissions,but has no effect on the relationship between bank competition and enterprises’ green TFP,even prevents bank competition from promoting enterprises’ green innovation.Based on the geographic coordinates of bank branches and enterprises,this paper constructs the panel data of bank competition at the enterprise level to extend the measurement of bank competition.This study supplements the economic consequences of bank competition from the perspective of enterprises’ green development and provides evidence that bank competition can serve as a solution to promote green development.Enterprises’ green development in this paper is divided into three aspects,namely,pollutant emission reduction,green innovation and green TFP,which correspond to pollution control,green technology upgrading and green efficiency improvement,respectively.The empirical results indicate that bank competition has a significant positive impact on all these three aspects.After distinguishing the types of banks,it is found that local commercial banks significantly promote the pollution reduction effect of bank competition,joint-stock commercial banks play a significant role in promoting the impact of bank competition on enterprises’ green innovation and green TFP,while foreign banks can significantly promote the positive impact of bank competition on green TFP.In addition,this paper also considers the impact of environmental regulation and green credit policy,which represents the visible hand of the government,on the resource allocation of bank competition,which represents the invisible hand of the market.