An Empirical Study On The Impact Of Banking Competition On Inefficient Investment

After 30 years of reform,China's banking industry has gradually developed from a single banking system to a diversified competitive system,the proportion of state-owned banks decreased year by year,private banks,foreign banks and other types of banks continue to influx,the pattern of China's banking competition has undergone tremendous changes.China's banking industry has shown more and more intense competition,the enterprise's financial ecological environment has been optimized.Under the background of the underdeveloped capital market in China,the bank loan is an important channel to obtain the investment funds of the enterprise's project,which directly restricts the project decision of the enterprise.So,whether the increase in the degree of competition in the banking industry will promote the efficiency of investment,or cause the low efficiency of investment?In order to answer this question,this paper explores the relationship between the degree of competition in the banking industry and the inefficient investment of the enterprises based on the realistic background of the intensification of competition in the banking industry.It can not only help the enterprises to formulate corresponding measures to reduce the inefficient investment behavior,but also provide empirical support for the government to gradually promote the competitive structure of the banking industry.Based on the data disclosed by China Banking Regulatory Commission from 2007 to 2016,this paper depicts the distribution of assets of Chinese banking financial institutions and shows the trend of banking competition in a simple and intuitive manner.And then the paper uses the Richardson equation to get the residual and take the logarithm of the value as the enterprise's inefficient investment level to build the regression equation to test the relationship between the banking competition and the enterprise's inefficient investment according to the relevant information of the listed companies from 2008 to 2015,and then add the intersection items to verify whether there is differences of different firms or different controllers.The following conclusions are found in this paper.1.The greater the degree of competition in the banking industry the more it can effectively curb the inefficient investment situation.First,the intensification of competition in the banking industry allows enterprises to obtain more external financing and through the re-signing of the contract to produce governance role,so that it can ease the lack of investment;Second,the banking industry competition can improve the unreasonable allocation of credit resources and strengthen the bank's external governance role,so as to effectively avoid the company over-investment.2.For companies facing different financing constraints,the extent to which banking competition inhibits inefficient investment is different.In particular,the inhibitory effect of banking competition on inefficient investment is more pronounced in firms with larger financing constraints.3.For enterprises of different property rights,the degree of suppression of the inefficient investment in banking competition is significantly different.The intensification of the competition degree of the banking industry makes the credit behavior turn to more marketization,and the financing constraint faced by the private enterprise is alleviated to a certain extent.Banks as asset suppliers become an important part of corporate governance,due to the lack of government intervention it can produce more effective supervision of private enterprises.At the same time,private enterprises face greater threat of bankruptcy.Therefore,compared to state-owned enterprises,the increase in the inhibition degree of banking competition on the inefficient investment is more significant in the non-state-owned enterprises.