Fintech,Banking Structure And SME Financing

Small and medium-sized enterprises contribute a lot to economic growth.According to the fourth national economic census report released in 2019,the annual business income of SMEs reached 188.2 trillion yuan by the end of 2018,accounting for 68.2% of the annual business income of all enterprise legal persons.However,the overall scale of loans available to SMEs is clearly not in line with their contribution,and they face the problem of difficult and expensive financing.SMEs generally suffer from a lack of collateral and low transparency of business activities,which makes it difficult for SMEs to obtain borrowing support from banks’ financial intermediaries.Since the emergence of things that meet the definition of fintech in China in 2004,fintech development has been soaring,receiving attention,developing rapidly and applying a wide range of scenarios,as fintech can better identify the financing needs of SMEs,obtain the true status of enterprises and reduce the risk of bank financing,and is gradually being used in SME financing.Development Plan for Financial Technology(Fin Tech)(2022-2025),indicating that the importance of Fin Tech development in China is still increasing.Therefore,this paper focuses on exploring the impact of Fin Tech development on SME financing and the role of the banking structure in it to contribute to the better and faster development of Fin Tech in China.Based on previous studies,this paper will further explore the impact of the level of fintech development on SME financing and play an indirect role by influencing the structure of the banking sector.On this basis,Baidu search index data were collected manually to form national provincial fintech development level indicators related to bank SME financing,and provincial panel data from 2013-2020 were used to carry out relevant empirical tests.This paper employs a fixed-effects model and an OLS model with cross product and quadratic terms to explore three questions:(1)how SME financing changes with changes in the structure of the banking sector;(2)the direct impact of fintech development on SME financing;and(3)the indirect impact of fintech development on SME financing through the structure of the banking sector.The findings are that,on the one hand,fintech development can directly contribute to SME financing,and the use of fintech can narrow the financing gap between relatively large-scale and small enterprises.On the other hand,there is an inverted U-shaped relationship between banking sector structure and SME credit financing,i.e.,there is an optimal banking sector structure,and the development of fintech will change the optimal market structure of the banking sector,i.e.,as the level of fintech development increases,the banking sector structure will develop in a more competitive direction,which in turn will affect SME financing through this path.After further heterogeneity analysis,it is found that there are significant regional differences in the impact of fintech development on SME financing.To enrich the findings,this paper also uses a continuous double difference model with moderating effects to investigate the impact of the new crown epidemic on SME financing and the moderating effects of fintech and banking sector structure on this impact process.The results show that the impact of the new crown epidemic increases SME financing,and the provinces with more developed financial technology and more monopolistic banking sector structure have less impact on SME financing and are more resistant to exogenous shocks.The marginal contributions of this paper are mainly the following two: 1.There are innovations in the research perspective.This paper combines the perspectives of SME credit and banking industry structure,not only limited to the direct impact of fintech on corporate credit,but also designs a model to study the indirect impact of fintech development on corporate credit through changing the banking industry structure,which enriches the relevant theories on SME financing and banking industry structure and provides theoretical reference and empirical support for the cooperation between fintech and banking industry structure;2.There are innovations in the content,which are mainly reflected in:(1)there are innovations in data construction.This paper uses the Baidu search index to establish a more relevant financial technology level development index specifically for banks’ SME credit;at the same time,many new concepts that have emerged in recent years are added to the index construction process,constituting a new thesaurus that is more adaptable to the development of the times,making the index more current and complementary to the current data on this aspect;(2)there are innovations in the data structure used.This paper uses provincial panel data to empirically analyze SME financing in the entire banking system,and conducts heterogeneity tests for provinces with different levels of financial development,which complements studies based on the micro level of enterprises and helps analyze the impact of SME financing and the structure of the banking industry in more detail and improve the effectiveness of decision support;(3)there are innovations in the research methodology.There are few studies on the impact of new crown epidemic shocks on SME financing,and even fewer combining it with fintech development and banking industry structure.This paper innovatively uses a continuous double difference model to study the impact of the new crown epidemic shock on SME financing and adds an interaction term to investigate the moderating effect of fintech development and banking industry structure on this impact,which helps to fill the gap of domestic research in this area and make a complement to the related theory.