Banking Competition And Listed Firms' Financing Cost

Using the financial data of a-share listed companies from 2007 to 2017 and the data of bank branches in prefecture-level cities,this paper empirically studies the relationship between banking competition and financing cost of listed companies,and examines the heterogeneity of the impact of increased banking competition on financing cost of state-owned and private enterprises.The results show that there is a positive correlation between banking competition and the financing cost of listed companies,that is,the more concentrated the banking industry is,the lower the financing cost of listed companies will be.In the sample interval,state-owned banks and urban commercial banks don't reach the optimal matching structure when choosing credit transaction objects,and they all lend more to private listed enterprises,which increases the overall financing cost.Compared with state-owned listed enterprises,banking competition has a greater positive impact on the financing cost of private listed enterprises.Due to the implementation of the policy to relax the restrictions on the establishment of branc:hes in small and medium-sized banks,the market structure of the banking industry has changed and the share of small and medium-sized banks has increased.This paper finds that the increase of the share of urban commercial banks will increase the positive impact of banking competition on the financing cost of listed enterprises.This paper further verifies the robustness of the research results through a series of robustness analysis,such as nonlinear model regression,replacement of new explanatory variables regression,instrumental variable regression and so on.The results of this study support the "information hypothesis"and provide empirical evidence for the research on competition and financing cost in the banking industry.For private listed enterprises,the restriction on the establishment of small and medium-sized bank branches makes the banking industry more competitive,private enterprises get more financing opportunities,and the problem of financing difficulty is alleviated.However,to solve the problem of expensive financing for enterprises,small and medium-sized banks need to vigorously develop relationship credit between banks and enterprises,maintain long-term and stable relationship between banks and enterprises,reduce information asymmetry,reduce the cost of screening information and supervision,and improve efficiency.Enterprises can also obtain stable financing supply and reduce financing cost.