Research On How County Bank Market Structure Effects The SMEs Financing

County economy is the foundation of the national economy. Small and mediumenterprises within the county have a very important position and role. The SMEfinancing problem has always existed. Its root cause is the asymmetric informationproblem between banks and enterprises. Existing research results show that therelationship lending can solve the problem of asymmetric information effectively andincrease the availability of credit for SMEs. Market structure is one of the importantfactors which affect the relationship lending.The government has implemented incremental reform of rural finance from2006.The main purpose is to change the county banking market structure and competition,and to provide more financial support to SMEs in the county. Based on this, this paperstudies how the market structure impacts county SME financing through relationshiplending,providing suggestions for county banking market access.This paper analyzes how the county bank market structure effects the countySMEs financing, using some relevant theories such as the SCP paradigm. And proposethat "relationship lending" is the main conduction factor. In the base of consideringthe comparative advantage that different-sized banks have on different competitionmarket segments layer, this paper subdivides the banking market structure of county,and analyses the different effects that different regional banking market competitivestructures and different sources of competition have on the relationship lending,froma dynamic point of view.Based on the theoretical analysis, then select the relevantdata samples in Hunan31counties to establish panel data model for empiricalresearch.The theoretical results show that the establishment of some new financialinstitutions will change the market structure type and competition situation in thebanking market in the county.If the new competitive situation is conducive to thedevelopment of relationship lending, it will help solve the financing difficulties ofSMEs the problem, otherwise, it can not solve the SMEs financing problems.Theempirical results show that in the sample counties in Hunan Province,theconcentration of banking market has significant negative impact on the SME CreditAvailability. The higher the degree of monopoly, the more detrimental the SMEfinancing. The market structure is "a small bank and several big bank branches," and market concentration is high, the competition is weak.So, the key of the county market accessing of banking institutions is to grasp the"efficient market access principle" to build competitive market environment in favorof the development of relationship lending, in the meantime, conduct and support newentrants banks so that it can truly serve for the county economy.