Does Banking Competition Alleviate or Worsen Credit Constraints Faced by Small- and Medium-Sized Enterprises? Evidence from China
Terence Tai-Leung Chong
The Chinese University of Hong Kong (CUHK) - Institute of Global Economics and Finance
VU University Amsterdam
University of Zurich - Department of Banking and Finance; Swiss Finance Institute
April 4, 2013
European Banking Center Discussion Paper No. 2012-007
Banking competition may enhance or hinder the financing of small and medium-sized enterprises. Using a survey on the financing of such enterprises in China, combined with detailed bank branch information, we investigate how concentration in local banking market affects the availability of credit. We find that lower market concentration alleviates financing constraints. The widespread presence of joint-stock banks has a larger effect on alleviating these constraints, than the presence of city commercial banks, while the presence of state-owned banks has a smaller effect.
Number of Pages in PDF File: 51
Keywords: Banking Competition, SMEs Financing, Credit Constraints
JEL Classification: D41, D43, G21
Date posted: February 13, 2011 ; Last revised: December 10, 2014
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