Research On The Relationship Between Banking Competition And Firm Innovation Quality

After nearly 40 years of rapid economic growth,the extensive mode of economic growth has become unsustainable.And it has become a social consensus that we need a new growth model as the core of technological and innovative development.The enterprise is undoubtedly the main force to develop this model,and the innovation ability and quality of firm is an important index whether our economy is vitality.However,whether China's financial system can play a positive role on firm innovation and achieve the Chinese innovation strategy.It has attracted more and more attention from scholars and policy makers.At the same time,under the differentiated local government policy,the subsidies and special funds always affect the relationship between bank and enterprise.So,what is impact the local government on banks and firm innovation,which is also the focus of this paper.Based on the background of deregulation of banking industry in China,this paper investigates the impact banking competition on firm innovation and the role of subsidies.Firstly,this paper makes a simple analysis of the background,purpose and significance of this paper,and determines the research topics and direction by analyzing the existing literature.Secondly,this paper makes a statistical analysis of the trend and current situation of banking competition and firm innovation in China,and discusses the relationship between the banking competition and firm innovation on the theory.Finally,Using the samples of 115 cities in China,this paper examines the relationship between banking competition and enterprise innovation in China,and the effect of government subsidies,and provides suggestions.This paper finds that:(1)the deregulation of banking has led to the obvious expansion of bank branches,especially small and medium-sized banks,and the degree of banking competition in China has increased;(2)the patents of enterprises in China is increasing,while the efficiency of innovation is decreasing,and the efficiency of innovation in Chinese Central and Western Regions is higher;(3)the relationship between banking competition and firm innovation in China is significant inverted "U",and excessive subsidies squeezes out the demand for bank credit,which make a negative effect on firm innovation;(4)There are differences in the nature of property rights between banking competition and enterprise innovation in China.There is a significant "U"relationship between banking competition and enterprise innovation in state-owned enterprises,while there is a significant "U" relationship between banking and enterprise innovation in non-state-owned enterprises;(5)There is regional differences in the relationship of banking competition and firm innovation in China.The excessive subsidies in Eastern regions make a significant "U" relationship between banking competition and firm innovation.But there is a significant inverted "U" relationship between banking competition and firm innovation in the Central and Western region.Base on re-examining and deeply understanding the relationship between China's banking system and enterprise innovation,this paper puts some suggestions for the banking industry,enterprises and the government.we hope provide a experience reference on improving China's banking system structure,guiding small and medium-sized enterprises R&D and innovation,deepening China's financial system reform,and promoting the full implementation of China's innovation strategy.