Bank price competition and enterprise innovation——Based on empirical evidence of Chinese A-share listed companies

Yi Li and Wei Peng

International Review of Financial Analysis, 2024, vol. 91, issue C

Abstract: This paper mainly discusses the influence and mechanism of bank price competition on corporate innovation activities. Taking China's A-share listed companies from 2013 to 2021 as a sample and constructing a Lerner index to measure bank price competition based on the data of 130 banks in China, a fixed effect model is used to analyze the influence of bank price competition on enterprise innovation. At the same time, the influence mechanism of bank price competition on enterprise innovation activities is analyzed from the perspectives of financing cost, credit availability and bank risk preference. The study found that the deepening of bank price competition can effectively increase the R&D investment of enterprises and promote the innovation output of enterprises. At the enterprise level, bank price competition can reduce the financing cost of enterprises and improve the availability of credit for enterprises, thereby alleviating the financing constraints faced by enterprises, encouraging enterprises to enter the innovation sector, and increasing R&D investment and innovation output. Moreover, bank competition can also improve the risk preference of banks so that innovative projects and enterprises with higher risks can obtain more credit support. In addition, the study also found that bank price competition can significantly promote the innovation input and output of private enterprises and small and medium-sized enterprises, but the promotion effect on the innovation input and output of state-owned enterprises and large enterprises is not obvious.

Keywords: Bank price competition; Lerner index; Innovation output; Innovation input (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:91:y:2024:i:c:s1057521923005203

DOI: 10.1016/j.irfa.2023.103004

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