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Bank Competition, Financing Constraints, and Enterprise Innovation Investment

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  • Lei Zhang
  • Wen-Tsao Pan

Abstract

Based on the data of China’s listed companies from 2007 to 2020 and the financial license of the China Banking and Insurance Regulatory Commission, this paper analyzes the influence of bank competition on enterprise innovation investment and its mechanism. It is found that bank competition can improve the enterprise innovation investment, which still holds true after endogenous treatment and robustness test. Further research demonstrates that bank competition plays a stronger role in enterprise innovation for non-state-owned enterprises and small-scale enterprises. The mechanism analysis shows that bank competition can promote enterprise innovation investment and enterprise financialization by easing financing constraints. Moreover, enterprise financialization has a crowding-out effect on enterprise innovation investment. Therefore, moderately intensifying bank competition, further improving the financial system, and deepening the financial marketization reform have profound effects on driving enterprise innovation and its high-quality development.

Suggested Citation

  • Lei Zhang & Wen-Tsao Pan, 2022. "Bank Competition, Financing Constraints, and Enterprise Innovation Investment," Discrete Dynamics in Nature and Society, Hindawi, vol. 2022, pages 1-9, August.
    • Handle: RePEc:hin:jnddns:7399321
    DOI: 10.1155/2022/7399321
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    Cited by:

    1. Li, Quan & Chen, Huimin & Chen, Yang & Xiao, Tong & Wang, Li, 2023. "Digital economy, financing constraints, and corporate innovation," Pacific-Basin Finance Journal, Elsevier, vol. 80(C).
    2. Wei, Qi & Zeng, Sheng & Tao, Qingmei, 2024. "Does bank competition improve borrower welfare? Evidence from China," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 1353-1368.
    3. Yan Han & Cheng Pan & Fengjun Jin, 2023. "Does the Improvement of the Business Environment Improve the Innovation Efficiency of Enterprises? Evidence from the Listed Companies in China," Sustainability, MDPI, vol. 15(14), pages 1-25, July.

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