Research On The Impact Of Bank-firm Relationship To Investment Efficiency

As a useful supplement to the Main Board, The GEM provides much more financing channels to those companies who are temporarily unable to list on the Main Board, it plays an important role in the capital market. Companies listed on the GEM mainly contain entrepreneurial, high-tech and some SMEs, they played an Incomparable role on promoting technological innovation, increasing employment and the promotion of economic growth. However, since they are mostly established shorter, smaller size, less collateral assets available and higher risk. Additionally, there exists credit discrimination in the capital market. All of these make companies of the GEM fall into the debt financing dilemma. Undoubtedly, it is a constraint to the growth and development of the GEM listed companies who are known for its high growth, it also easily lead to underinvestment or overinvestment. To ease the financing difficulties, more and more companies tend to establish a good relationship with the bank. This will make a positive effect on companies and banks, long-term contact will help to reduce the information asymmetry between enterprises and banks, companies’ financing costs and improve the likelihood of obtaining debt financing. Then it will make further more influence on the efficiency of investment through the cash flow.In this context, firstly, this paper summarized the relevant literature on bank-firm relationship and investment efficiency at home and abroad. Then, it defined bank-firm relationship again. In the support of asymmetric information theory, the theory of financial intermediation, relational finance theory and the theory of free cash flow, this paper analyzed the theoretical relationship of bank-firm relationship, debt financing and investment efficiency, and put forward the research hypotheses eventually. Next, the author selected 2009-2013 data of companies listed on the GEM, then built two models of bank-firm relationship and debt financing、bank-firm relationship and investment efficiency for empirical research to prove their relations, and draw the conclusions of this study, then put forward recommendations specifically.The result indicates that executives relationship of bank-firm、credit relationship of bank-firm are all positive to the debt financing. Further study indicates that compared with long-term loan, executives relationship of bank-firm are much more positive to the short-term loan; Compared with short-term loan, credit relationship of bank-firm are much more positive to the long-term loan. executives relationship of bank-firm、credit relationship of bank-firm are all positive to the investment efficiency. Further grouping regression according to the different investment, ownership and market progress indicates that compared with under-investment, the bank-firm relationship of over-investment company is much more positive to investment efficiency; Compared with state-owned company, the bank-firm relationship of non state-owned company is much more positive to investment efficiency; Compared with high market progress company, the bank-firm relationship of low market progress company is much more positive to investment efficiency. Then, I recommend respectively from the market macroeconomic environment, banks and enterprises, and hope to provide a useful reference for the development of bank-firm relationship.