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Bank Concentration and Firms' Debt Structure: Evidence from China

Peisen Liu (), Shoujun Huang () and Houjian Li ()
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Peisen Liu: School of Economics and Business Administration, Chongqing University
Shoujun Huang: Lingnan (University) College, SunYat-sen University
Houjian Li: College of Management, Sichuan Agricultural University

Annals of Economics and Finance, 2018, vol. 19, issue 1, 213-227

Abstract: The argument on the puzzling relationship between bank concentration and firms' debt structure in China remains inconclusive as the effects of firm ownership competition and firm size competition are intertwined in the existing research. This article utilizes the market shares of Big Four state-owned banks to investigate whether bank concentration affects debt structure in China. The results show that bank concentration has a stronger positive effect on debt maturity for state-owned enterprises and large-sized enterprises. The effect of bank concentration on debt maturity strengthens with firm state ownership and firm size. Moreover, state-owned enterprises and large-sized enterprises are associated with a longer debt maturity compared to non-state-owned enterprises and small and medium-sized enterprises, respectively. These results reveal that privatizing state-owned banks and state-owned enterprises would be an effective way to reduce credit discrimination and relieve the capital constraints of non-state-owned enterprises and small and medium-sized enterprises.

Keywords: bank concentration; state ownership; firm size; debt structure (search for similar items in EconPapers)
JEL-codes: G21 G32 M40 (search for similar items in EconPapers)
Date: 2018
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