Research On The Influence Of Chinese Banking Competition On The Inefficient Investment Of Enterprises

Inefficient investment of enterprises refers to an investment behavior in which the actual investment level of an enterprise is inconsistent with its optimal investment level,including under-investment and over-investment.Due to the widespread existence of financing constraints and agency conflicts,some enterprises in Our country appear inefficient investment phenomena.Under the assumption of a perfect capital market,MM theory points out that there is no relationship between investment and financing of enterprises.However,under the realistic background that China’s capital market is not mature enough,the bank loan is still a vital channel for enterprises to obtain investment funds,and the behavior and rules of banks have a huge impact on the investment behavior of Chinese enterprises.With the deepening of the market-oriented reform of the banking industry,China’s banking industry is gradually transitioning from a monopolistic system to a competitive system,and the competition among banks is becoming increasingly fierce.Competition in the banking industry has changed bank credit behavior,and the management procedures and means of the bank in loan approval,loan management,and other aspects have undergone great changes,and these changes will affect the acquisition and use of enterprise credit funds,directly related to enterprise investment and financing.Based on this,this paper according to the internal relationship between banking competition and enterprise investment and explores the impact of banking competition on inefficient investment of enterprises in China.Based on modern enterprise investment theory,financial intermediary theory,financial deepening theory,and other theories,this paper constructs the internal logic between banking competition and inefficient investment of enterprise.HHI index and Richardson model are used to measure the competition status of the banking industry and the inefficient investment status of enterprises.The panel data regression model and intermediary effect model are constructed to empirically test the influence and mechanism of banking competition on inefficient investment of Chinese enterprises.The conclusions of this paper are as follows: First,The competition among banks in our country is becoming more and more fierce,which effectively reduces the inefficient investment behavior of Chinese enterprises,and this effect is more significant in nonstate-owned enterprises;Second,banking competition can produce the "capital effect",that is,by reducing information asymmetry and alleviating financing constraints,enterprises can reduce insufficient investment;Third,banking competition can exert the "governance effect",that is,by strengthening the external governance role of banks and reducing agency conflicts within enterprises,excessive investment of enterprises can be restrained.Considering the above research results,this paper puts forward some suggestions: Continuing to deepen the banking reform,to create a good financing environment for enterprises;Accelerating the technological innovation and upgrading of banks to better serve the main body of the market economy;Expanding financing channels for enterprises to alleviate the problem of difficult and expensive financing;Strengthening internal governance and external supervision of enterprises and optimize their investment decisions.