Research On Ownership Difference Of Bank Credit Direction Effect On Industrial Structure Optimization

During the three decades of China’s reform and opening up, the private economyhas been developed a lot. It has become a major force in China’s national economy.However, there are still some problems in the developing procedure of privateeconomic. Especially the difficulties in financing that are important issues that limitits development. The ownership difference of bank credit direction is the direct causeof difficulty in private enterprise financing. At the same time, inefficiency and toolarge-scale state-owned enterprises which are crowding out private economic capitalresources are the indirect causes of the difficulty in private enterprise financing.However, the speed of China’s industrial structure optimization is slowing down,which is related to the ownership difference of bank credit direction.This paper reviews the theoretical mechanisms of the ownership difference ofbank credit direction which affect the industrial structure optimization. Theoreticalmechanism is divided into two parts. The first part reviews the mechanism that howownership differences affect bank credit direction. It analyzes the relationshipbetween asymmetric information, transaction cost, and bank credit direction. Bankcredit direction is related to transaction cost, and transaction cost is determined by thedegree of information asymmetry; then, considering the ownership difference,different ownership enterprises have different transaction cost, the differentownership of enterprises lead to the different ownership of the bank credit direction,and banks are more willing to lend to state-owned enterprises. However, consideringthe interest rates, if banks are able to develop different interest rates for differentownership enterprises, the high level of interest rates will make up the hightransaction cost. But there is no interest rate differential policy. Therefore, banks arenot willing to lend to non-state-owned enterprises. The second part reviews themechanism of ownership difference of bank credit direction that affects industrialstructure optimization, including funds oriented mechanism, technological innovationmechanism, intermediary services function. Then, this paper analyzes the presentsituation of China’s bank credit direction, and find out that ownership differenceissues is prevalent in the bank credit direction. The performance of ownershipdifference of bank credit direction includes:1. the high proportion of state-ownedenterprises loans,2. it is difficult for private enterprises to obtain bank credit funds. Then, it analyzes the different capital utilization ratio of different enterprises, thefinancing condition for research and development of different enterprises, and thesituation of industrial structure optimization in different ownership economy. Next,the author builds an empirical model, according to the1999-2010’s panel data, thenthrough fixed effects and generalized least squares regression, this paper obtainsempirical results: firsly, bank credit promotes industrial structure optimization,secondly, the proportion of state-owned economy overweight will hinder theoptimization of the industrial structure, lastly, the ownership difference of bank creditdirection has negative effect on industrial structure optimization.Finally, according to the theoretical analysis and empirical results, this paperproposes the following policy recommendations: fisrt, reducing transaction costs,eliminating ownership difference of bank credit direction; seond, interest rates shouldplay the indirect guiding role in the industrial structure optimization; and last, guidingbank credit direction in reason, to promote the industrial structure optimization.