Research On The Alleviating Effect Of Banking Competition On Small And Medium Enterprises Financing Constraints

SMEs(Small and Medium Enterprises)are an important engine for the development of China's national economy.However,the issue of financing constraints faced by SMEs has become a major obstacle to their development.There are many reasons for the financing constraints of SMEs.This paper starts from the perspective of financial supply side,focuses on the competition in the banking industry and explores the internal mechanism of banking competition to ease the financing constraints of SMEs.On the basis of systematically combing and summarizing the existing research results,this paper bases on monopolistic competition theory,SMEs financing constraint theory,market power hypothesis and optimal financial structure theory,and focuses on China's banking market concentration and financing constraints of SMEs.It is concluded that the inadequate competition in the China's banking industry is the main reason for the financing difficulties of SMEs.Promoting competition in the banking industry will help alleviate the financing constraints of SMEs.Based on the above qualitative analysis,this paper takes the loan amount of 35 banks as the data sample,uses the structured method to calculate the HHI to measure the degree of competition in China's banking industry.Considering that the development of small and medium-sized banks can promote competition in the banking industry,this paper measures the development level of small and medium-sized banks from the perspectives of small and medium-sized banks' asset ratio,loan ratio and deposit ratio.In order to study the mitigation effect of banking competition on the financing constraints of SMEs and the mitigation effect of the development of small and medium-sized banks on the financing constraints of SMEs.Taking the data of China's small and medium-sized listed companies in 2010-2017 as a sample,the cash-cash flow sensitivity model is constructed,and the static panel data model is estimated by the fixed effect method to study the mitigation effect of banking competition on the financing constraints of SMEs and the mitigation effect of the development of small and medium-sized banks on the financing constraints of SMEs.Meantime,a dynamic panel data model was constructed,and the model was evaluated using the first-order differential GMM method.The research conclusions show that there are financing constraints for SMEs in China in short and long time.Strengthening the competition in the banking industry can alleviate the financing constraints of SMEs,and increasing the market share of small and medium-sized banks is conducive to solving the financing problems of SMEs.In summary,this paper proposes the following countermeasures.First,the banking regulatory authorities should strive to create a level playing field and deepen the reform of the banking sector.Second,increase the transformation and innovation of commercial banks.Large banks should actively provide better financial services to SMEs through product innovation and service innovation.Small and medium-sized banks should strengthen the professional characteristics and improve the quality of credit services for small and medium-sized enterprises.Third,strengthen the supervision of informal financial institutions,and rationally guide informal financial institutions to invest in small and medium-sized enterprises to solve the problem of financing difficulties for SMEs.