Management Review

Management Review ›› 2022, Vol. 34 ›› Issue (1): 69-78.

• Economic and Financial Management • Previous Articles     Next Articles

Banking Competition and Heterogeneity of Financial Asset Allocation Structure

Dai Jing1, Yang Zheng2, Liu Guanchun3   

  1. 1. Financial School, Hubei University of Economics, Wuhan 430205;
    2. Management School, Wuhan Textile University, Wuhan 430200;
    3. Public Economics and Management School, Shanghai University of Finance and Economics, Shanghai 200433
  • Received:2019-11-25 Online:2022-01-28 Published:2022-02-25

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Abstract: Using the data of city-level commercial bank branches and parent companies of China’s non-financial listed companies in 2009-2018, this paper investigates the effects of bank competition on heterogeneity of financial assets structure. The results show that bank competition significantly reduces the short-term financial assets of companies and alleviates the “reservoir effect”. However, bank competition increases long-term financial assets and intensifies the “substitution effect”. And both effects are prominent in non-state-owned enterprises and small enterprises. Further tests indicate that bank competition affects financial asset allocation of companies by improving credit availability. This paper emphasizes the key role of financial constraints for heterogeneity of financial asset structure.

Key words: bank competition, financial asset structure, heterogeneity, financial constraints