Banking Competition,Financing Constraints And Enterprise R&D Investment

Small and medium-Sized enterprises are the important force of technology innovation in our country.The gem listed companies which belong to small and medium-Sized enterprises are characterized by the high growth,stable profitability and frequent innovation,so it is very significant to explore how to effectively ease financing constraints on the gem listed companies' R&D investment.This is an issue of vital concern to stimulating R&D investment of small and medium-Sized enterprises.Under the current financial system in China,Bank loan is the main source of external funding for enterprises.Existing domestic literatures explore mostly whether financial development affects enterprise financing constraints and investment behavior from the perspective of macro financial.However,there are few papers to research the relationship between Banking competition and corporate financing constraints via separating Banking from macro financial.In this paper the author investigates the effect of Banking completion on the relationship between financing constraints and R&D investment of enterprises,using the panel data of gem listed companies in China from 2010 to 2015,constructing the provincial level of Banking competition indicators by collecting financial license information of commercial Banks in every province of our country by hand.In this paper,the research results show that the gem listed companies' R&D investment does not depend on the operating cash flow,which indirectly suggests that it is reasonable that some scholars question whether investment-cash flow sensitivity is the same as the degree of financing constraints.Further,this paper explores the relationship between financing constraints and R&D intensity by constructing financing constraint index which is produced by means of financial indicators.The result suggests that financing constraints significantly restrict the gem listed companies' R&D investment.Further grouped regression result shows that the restriction effect is more significant in smaller-scale firms.Then Banking competition as the exogenous variable is introduced and the influences of Banking competition on the gem listed companies' R&D investment are tested empirically.The author finds that Banking competition obviously alleviates inhibition effect of the financing constraints on R&D investment for the gem listed companies.Especially,this relief effect is more apparent on larger-scale firms,but not significant on smaller firms.Although Banking competition does not significantly alleviate the negative effect of financing constraints on smaller-scale firms' R&D investment,it still promotes their R&D investment.What leads to this result and whether R&D motives are linked with the enterprises'R&D investment on a certain development stAge,all of which are needed to be further researched.The possible contributions of this paper may be broadening the research perspective of financing constraints by introducing Banking competition to the research concerning with financing constraints and R&D investment and providing new empirical evidences.The conclusion may shed light on practice and policy.First of all,the State should encourAge commercial Banks and other financial institutions to carry out financing innovation projects aimed at enterprises' R&D investment,develop diversified credit products and financial services and broaden the financing channels of corporate R&D activities.Secondly,the result of this paper shows that Banking competition alleviates financing constraints on the gem listed companies' R&D investment,which is as expected by Lin yifu who maintains that the ideal financial system is developing the small and medium-Sized commercial Banks.Thirdly,Banking competition significantly alleviates financing constraints on larger firms'R&D investment on the gem listed companies rather than on smaller firms' R&D investment.It suggests that Banking competition be not so fierce as to benefit a large number of small firms.It will provide important reference value for the government decision-making departments to formulate the Banking reform goal in the future.The conclusion of this paper also implies that it be essential to propel the reform of financial liberalization,increase Banking competition and develop multi-dimensional and multi-level capital market in China.