The Impact Of Financial Structure On Capital Allocation Efficiency

At present,improving financial allocation efficiency through financial reform is an important driving force for realizing this transformation.Existing research generally believes that the improvement of financial development level will help allocate funds to the economic sectors and economic entities with the highest marginal efficiency.However,the existing research on the efficiency of financial system and capital allocation focuses on the relationship between the scale of financial development and the efficiency of capital allocation,while paying little attention to the relationship between financial structure and capital allocation efficiency.In fact,the evolution of financial structure will affect the risk-taking behavior of banks,and the risk-taking behavior of banks will affect the credit funds and the structure of the investment,thus affecting the efficiency of capital allocation.Based on the above ideas,this paper chooses to use bank risk-taking as a mediator to study the impact of financial structure on capital allocation efficiency.In terms of theoretical analysis,this paper analyzes the impact mechanism of financial structure on bank risk exposure,the impact mechanism of bank risk commitment on capital allocation efficiency and the impact mechanism of financial structure on capital allocation efficiency.This paper first analyzes the possible impact of financial structure on bank risk-taking behavior from three different dimensions: indirect financing ratio,banking competition structure,emerging finance and traditional finance.Then it analyzes how bank risk-taking behavior affects it.The mechanism of credit fund allocation,which in turn affects the efficiency of capital allocation,and the overall willingness of bank risk-taking,will help improve the capital allocation,as well as the increased willingness of banks to risk will help ease the financing constraints of technology-based enterprises and R&D innovation projects.Small and medium-sized enterprises and private enterprises that were originally discriminated against by credit also received more financing support.In terms of empirical research,this paper firstly calculates the capital allocation efficiency of industrial sectors in 30 provinces in China from 2008 to 2016 based on Wurgler's(2000)model;then constructs an inter-provincial panel model to empirically analyze the impact of financial structure on capital allocation efficiency through bank risk-taking.The empirical analysis includes the following links:(1)the ratio of indirect financing to social financing scale,the ratio of small and medium-sized bank assets to total banking assets,the ratio of venture capital and private equity investment to the total assets of traditional financial industry.The agent variable of financial structure empirically tests the impact of financial structure on capital allocation efficiency;(2)uses the proportion of weighted risk assets as the proxy variable of bank risk taking,and empirically analyzes the impact of financial structure on bank risk exposure.(3)Using the Baron-Kenny method to empirically analyze the mediating role of bank risk-taking in the impact of financial structure on capital allocation efficiency.The main research conclusions are as follows:(1)The increase of indirect financing ratio and the increase of market share of small and medium-sized banks will help improve the efficiency of capital allocation;however,the proportion of emerging finance such as venture capital and private equity funds is higher than that of traditional finance.The eastern region has significantly promoted the improvement of China's capital allocation efficiency,and has not yet had a significant impact in other regions.(2)In the process of financial structure indicators such as the ratio of indirect financing,market share of small and medium-sized banks,and the ratio of emerging finance to traditional finance,bank risk-taking has played a intermediary role.The main contributions of this paper are as follows:(1)The existing research literature on financial development and capital allocation efficiency mainly focuses on the scale of financial development and capital allocation efficiency,The impact has enriched the study of the relationship between financial development and economic growth.(2)There is no empirical analysis of the transmission mechanism;this paper uses bank risk taking as a mediator to sort out the financial structure and role in capital allocation.The mechanism of efficiency not only empirically tests the impact of financial structure changes on the efficiency of capital allocation,but also empirically tests the intermediary role of bank risk-taking in this process.