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Does Bank Concentration Affect Debt Maturity?

Peisen Liu (), Houjian Li () and Shoujun Huang ()
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Peisen Liu: School of Political Science and Public Administration, Southwest University, Chongqing, 400715, China.
Houjian Li: School of Public Affairs, Chongqing University, Chongqing, 400044, China
Shoujun Huang: Lingnan College, SunYat-sen University, Guangzhou, 510275, China

Journal for Economic Forecasting, 2018, issue 3, 73-87

Abstract: This study investigates whether bank concentration affects firms’ debt maturity and how firm size and firm government ownership impact the effect of bank concentration in China during the period 1998-2013. We find robust evidence that bank concentration reduces firms’ debt maturity. As regards the role of firm size and firm ownership variables, the results show that the negative effect of bank concentration on firms’ debt maturity weakens with firm size and firm government ownership. The negative influence of bank concentration strengthens for SMEs and non-SOEs than large-sized firms and SOEs, respectively. The debt maturity of SOEs decreased less than the debt maturity of non-SOEs in regions where bank concentration is higher. These findings are robust to several checks, including using alternative variables and alternative regression frameworks. These results reveal that privatizing state-owned banks and SOEs and reducing governments’ interventions would be effective ways to reduce debt risks and credit discrimination. The study provides light on the reforms of SOEs and the marketization of economy.

Keywords: bank concentration; state-owned banks; government ownership; debt maturity (search for similar items in EconPapers)
JEL-codes: G20 G32 E52 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:rjr:romjef:v::y:2018:i:3:p:73-87