Banking Market Structure And Small And Medium-Sized Enterprises Development Of China

SME has played a very important role in promoting economic growth, expanding employment, maintaining social stability, increasing national revenue, promoting technological progress and keeping a active market economy, etc. However, there are many difficulties in the course of its development, and the key is the financing constraints.Based on this reality, this paper studies the relationship between the SME financing and banking market structure and do an empirical test on the relationship between the development of SME and banking market structure. First, the article is based on SCP (structure-conduct-performance) paradigm,and use indicators of market share, market concentration ratio CR and the Herfindahl-type of index HHI to measure the degree of banking competition in the market. Research results show that China's four major state-owned commercial banks still have an absolute scale advantage, and the banking market concentration is relatively high, belonging to Oligopoly typeⅢ.But in the view of trend, the market share of the four major state-owned commercial banks is declining, the monopoly of China's banking sector is gradually being broken, joint-stock commercial banks and other small and medium banks are also in progress and development. Then the development of China's status and role of small and medium enterprises are described and analyzed. The paper analyses the difficulties and causes of small and medium enterprises financing.Then the paper takes on empirical research on the relationship between the SME banking market structure and GDP growth rate, by using the panel data in 1996 to 2005 of 30 provincial-level administrative units.Through using fixed-effect model of empirical research, after controlling other major factors that affect small and medium business GDP growth rates, the paper found that reduction in the banking market concentration is conducive to the increase in output and the development of SME. This paper puts forward the main conclusions and policy recommendations. The basic structure of this paper is as follows:The first chapter is foreword. It includes the background and research topics of this article, the significance of the study, research status at home and abroad and the structure of the paper.ChapterⅡanalyses China's banking market structure. First the paper define the structure of the banking market definition and types, then divide it into four basic types,which are the banking market structure, perfect competition, monopolistic competition, oligopoly and monopoly. Then the paper uses the market share and market concentration indicators to measure the banking market structure of China, and Empirical results show that China's banking market structure has been a gradual transition from a high concentration to moderate concentration, but the degree of market concentration remains high.Chapter III analyses the status of China's SME financing. This chapter first introduces the standard definition of domestic small and medium enterprises and several typical foreign countries or institutions.Then the paper analyzes the present situation and development of SME of China and important role. Finally the paper analyses the status quo of China's small and medium enterprises financing, as well as the formation of the reasons for difficulty financing.Chapter IV is banking market structure and growth of SME empirical test. This chapter proposed the following theoretical hypothesis:banking market concentration degree reduces, that is, the rise in market share of small and medium banks is conducive to the growth of SME in GDP and the development of SME. And then use the panel data in the period from 1996 to 2005 of 30 provincial-level administrative units of China to conduct an empirical test of this hypothesis.Chapter V puts forward the conclusions and policy recommendations.This chapter first presented the main conclusions of this paper, namely, the decline in banking market concentration is conducive to SME financing and the development of SME. Therefore, China should vigorously develop small and medium financial institutions.The paper has some main innovations:the paper takes on empirical research on the relationship between the SME banking market structure and GDP growth rate, by using the panel data in 1996 to 2005 of 30 provincial-level administrative units. Through using fixed-effect model of empirical research, after controlling other major factors that affect small and medium business GDP growth rates, the paper found that reduction in the banking market concentration is conducive to the increase in output and the development of SME.