Abstract
•We examine the effect of banking competition on SMEs' credit constraints in China.•Lower banking market concentration alleviates financing constraints of SMEs.•The joint-stock banks have a larger effect than the city commercial banks.•The joint-stock banks have a larger effect than the state-owned banks.•The effect is through prices rather than the offering of relationship lending. Banking competition may enhance or hinder the financing of small and medium-sized enterprises. Using a survey on the financing of such enterprises in China, combined with detailed bank branch information, we investigate how concentration in local banking market affects the availability of credit. We find that lower market concentration alleviates financing constraints. The widespread presence of joint-stock banks has a larger effect on alleviating these constraints, than the presence of city commercial banks, while the presence of state-owned banks has a smaller effect.
| Original language | English |
|---|---|
| Pages (from-to) | 3412-3424 |
| Number of pages | 13 |
| Journal | Journal of Banking and Finance |
| Volume | 37 |
| Issue number | 9 |
| DOIs | |
| Publication status | Published - 1 Sep 2013 |
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Keywords
- Banking competition
- Credit constraints
- SME financing
Cite this
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Does banking competition alleviate or worsen credit constraints faced by small- and medium-sized enterprises? Evidence from China. / Chong, Terence Tai Leung; Lu, Liping; Ongena, Steven.
In: Journal of Banking and Finance, Vol. 37, No. 9, 01.09.2013, p. 3412-3424.Research output: Contribution to Journal › Article › Academic › peer-review
TY - JOUR
T1 - Does banking competition alleviate or worsen credit constraints faced by small- and medium-sized enterprises? Evidence from China
AU - Chong, Terence Tai Leung
AU - Lu, Liping
AU - Ongena, Steven
PY - 2013/9/1
Y1 - 2013/9/1
N2 - •We examine the effect of banking competition on SMEs' credit constraints in China.•Lower banking market concentration alleviates financing constraints of SMEs.•The joint-stock banks have a larger effect than the city commercial banks.•The joint-stock banks have a larger effect than the state-owned banks.•The effect is through prices rather than the offering of relationship lending. Banking competition may enhance or hinder the financing of small and medium-sized enterprises. Using a survey on the financing of such enterprises in China, combined with detailed bank branch information, we investigate how concentration in local banking market affects the availability of credit. We find that lower market concentration alleviates financing constraints. The widespread presence of joint-stock banks has a larger effect on alleviating these constraints, than the presence of city commercial banks, while the presence of state-owned banks has a smaller effect.
AB - •We examine the effect of banking competition on SMEs' credit constraints in China.•Lower banking market concentration alleviates financing constraints of SMEs.•The joint-stock banks have a larger effect than the city commercial banks.•The joint-stock banks have a larger effect than the state-owned banks.•The effect is through prices rather than the offering of relationship lending. Banking competition may enhance or hinder the financing of small and medium-sized enterprises. Using a survey on the financing of such enterprises in China, combined with detailed bank branch information, we investigate how concentration in local banking market affects the availability of credit. We find that lower market concentration alleviates financing constraints. The widespread presence of joint-stock banks has a larger effect on alleviating these constraints, than the presence of city commercial banks, while the presence of state-owned banks has a smaller effect.
KW - Banking competition
KW - Credit constraints
KW - SME financing
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UR - http://www.scopus.com/inward/citedby.url?scp=84879263507&partnerID=8YFLogxK
U2 - 10.1016/j.jbankfin.2013.05.006
DO - 10.1016/j.jbankfin.2013.05.006
M3 - Article
VL - 37
SP - 3412
EP - 3424
JO - Journal of Banking and Finance
JF - Journal of Banking and Finance
SN - 0378-4266
IS - 9
ER -