The Impacts Of The Entry Of Local Urban Commercial Banks On Firm Value

In the early banking system of China,the financial system with four state-owned banks as the core paid too much attention to state-owned enterprises and ignored the financing problems of local SME and private companies.Based on this background,local governments began to gradually establish local financial institutions such as urban commercial banks and agricultural commercial banks for the relief of financing problems of local enterprises.Since then,local financial institutions have mushroomed,and China’s banking system has undergone tremendous changes,especially in recent years,the local government has vigorously promoted the construction of local financial institutions with local banking as the core and established its important position.The most representative of the local financial institutions is undoubtedly the city commercial bank.As a financial institution directly controlled by the local government,it promotes the development of the local financial market and enhances the activity of the local economy and has also different degrees of impact on the economic activities of local enterprises.What impact does the entry of local city commercial banks have on enterprise value?Does the entry of local city commercial banks have different impact on different types of enterprise value?Whether it has achieved the original intention and solved the financing problems faced by SME and private enterprises to a certain extent?This paper is based on the issues listed above.This paper took 2003-2018 listed enterprises as samples,used fixed effect model of two-way panel and double difference method of gradualness to study the impacts of the entry of local city commercial banks on firm value.The results found that,the entry of local city commercial banks has a significant positive role in increasing firm value,and its impact on the value of different types of enterprises is different,that is,the entry of local city commercial banks has a more significant role in increasing the value of private companies,SME,companies located in the central and western regions and companies with a high degree of factor market development.Then,as the significant positive effect of the entry of local city commercial banks on enterprise value is an important phenomenon in China’s private enterprises,taking private enterprises as the main research object,this paper further tests whether the entry of urban commercial banks can solve the financing problems faced by private enterprises to a certain extent,and finds that the entry of local urban commercial banks plays a more significant role in the promotion of enterprise value in the enterprises with high debt financing constraints and debt financing costs.Next,this paper explores how the entry of local city commercial banks affects the value of private enterprises in different legal environments?And this paper uses quantile regression to study the impact of the entry of local urban commercial banks on different quantile value levels.According to the empirical results,the entry of local city commercial banks plays a stronger role in increasing firm value for companies in cities with weak legal environment,and has a significant positive impact on the middle and higher quantile level of enterprises.In the end,this paper puts forward some policy suggestions from the perspective of the government on the basis of theoretical analysis and empirical research results,so as to promote the development of local city commercial banks to benefit the sustained and stable development of enterprises.