A Study On The Impact Of Banking Sector Structure On The Risk Of Share Price Collapse

In recent years,China’s economic development has made outstanding achievements,but at the same time there are also some problems,especially in the stock market,listed companies,especially in the small and medium-sized board,GEM enterprises there are a lot of share price collapse risk,swede island,Huning shares,Zhongke Jin Cai and other huge share price plunge cases are vividly remembered.At the same time,since the late1970 s,in order to promote the construction and development of China’s economic undertakings,China has gradually launched a financial system reform that has lasted for more than 40 years.Since entering the new era,in order to respond to economic policy adjustments and drive the further development of the real economy,the pace of China’s financial reform has continued to accelerate.The banks,which are at the core of the financial industry,are the main point of reform.The market structure of the banking industry has shown distinct changes.On the one hand,the various types of joint-stock commercial banks and city banks,which are representatives of small and medium-sized banks,have grown by leaps and bounds in terms of scale and number,and the number of their branches has expanded significantly;on the other hand,the traditional four state-owned banks have been under tremendous impact,facing constant erosion of their market share and threats to their monopoly position.The market structure of the banking sector is clearly competitive.Considering the above background,the deepening competition among banks will bring about changes in the allocation of resources in the financial market,which will inevitably affect the entire financial market and the participants therein.Many scholars have conducted in-depth studies on this issue,mainly focusing on the impact of banking competition on China’s macroeconomic policies and economic development and the impact of banking competition on micro enterprises.There are relatively few studies based on the perspective of enterprises at the micro level,and there are few studies on the risks faced by enterprises.At the same time,most theoretical studies on the risk of share price collapse of listed companies are based on internal factors of the companies,and few studies on the influence of external entities of the companies,especially the banking industry which is closely linked with the companies,and relatively few studies on the risk of share price collapse of small and medium-sized board and GEM companies.Based on this,this paper takes a structural perspective of the banking industry and examines the impact of the competitive structure of the banking industry on the extreme volatility of corporate share prices and the transmission mechanism,and further considers the differences in the size of corporate institutions,the strength of banking relationships and the proportion of investors on the "risk dampening" effect brought about by banking competition.The paper further considers the variability of the "risk dampening" effect of bank competition by differences in firm size,strength of bank-firm relationships and investor ratios.Specifically,the paper begins with a review of the domestic and international literature on the structure of the banking sector and the risk of stock price crashes.The paper then introduces information asymmetry theory,principal-agent theory,optimal financial structure theory and related concepts,and puts forward the hypotheses of the paper.Then,the heterogeneous roles of institutional investors,bank-firm relationships and firm size in the impact of banking industry structure on share price crash risk are also considered,taking the small and medium-sized board and GEM listed firms in China from2005 to 2021 as research samples.The findings show that:(1)the more competitive the banks are,the lower the risk of share price collapse of listed companies,i.e.a competitive banking market structure mitigates the risk of share price collapse;(2)The mitigating effect of a more competitive banking structure on share price crash risk is more pronounced among smaller firms compared to large-scale firms;(3)A competitive banking structure has a better dampening effect on the crash risk of firms with weaker relationships with banks compared to those with stronger relationships with banks;(4)a competitive banking structure has a more pronounced dampening effect on the risk of share price collapse among SMEs with a lower shareholding of institutional investors than SMEs with a higher shareholding of institutional investors.Further,the transmission mechanism of banking sector structure is investigated in terms of the path of financing constraints and agency costs.Finally,the possible endogeneity of this paper is tested using the instrumental variables approach,and a series of robustness tests still support the original conclusions.The possible marginal contributions of this paper are:(1)this paper studies corporate crash risk from the perspective of banking sector structure,explores the impact of financial reforms on corporate risk,provides insights for stabilising corporate share prices,and enriches the relevant research on banking sector structure on micro-firms;(2)from the perspective of banking sector structure,which is external to the firm,it explores the impact of banking sector structure on the share price crash risk of micro-firm subjects,enriching the related research on enterprise share price collapse risk;(3)further analyses the transmission path of banking industry structure on enterprise share price collapse risk,which is conducive to a clearer understanding of the link between banking industry structure and enterprise risk;(4)Based on the research of small and medium-sized enterprises and science and technology innovation board enterprises,this paper provides suggestions to help reduce the risks of small and medium-sized enterprises and promote the stable development of small and medium-sized enterprises and GEM enterprises.