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Does Bank Concentration Affect Debt Maturity?

Author

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  • Peisen LIU

    (School of Political Science and Public Administration, Southwest University, Chongqing, 400715, China.)

  • Houjian LI

    (School of Public Affairs, Chongqing University, Chongqing, 400044, China)

  • Shoujun HUANG

    (Lingnan College, SunYat-sen University, Guangzhou, 510275, China)

Abstract

This study investigates whether bank concentration affects firms’ debt maturity and how firm size and firm government ownership impact the effect of bank concentration in China during the period 1998-2013. We find robust evidence that bank concentration reduces firms’ debt maturity. As regards the role of firm size and firm ownership variables, the results show that the negative effect of bank concentration on firms’ debt maturity weakens with firm size and firm government ownership. The negative influence of bank concentration strengthens for SMEs and non-SOEs than large-sized firms and SOEs, respectively. The debt maturity of SOEs decreased less than the debt maturity of non-SOEs in regions where bank concentration is higher. These findings are robust to several checks, including using alternative variables and alternative regression frameworks. These results reveal that privatizing state-owned banks and SOEs and reducing governments’ interventions would be effective ways to reduce debt risks and credit discrimination. The study provides light on the reforms of SOEs and the marketization of economy.

Suggested Citation

  • Peisen LIU & Houjian LI & Shoujun HUANG, 2018. "Does Bank Concentration Affect Debt Maturity?," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 73-87, September.
    • Handle: RePEc:rjr:romjef:v::y:2018:i:3:p:73-87
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    References listed on IDEAS

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    Cited by:

    1. Peisen LIU & Yufeng XIA, 2021. "Bank Competition and Firm Innovation Output: The Role of Financing Constraints," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 171-188, December.

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    More about this item

    Keywords

    bank concentration; state-owned banks; government ownership; debt maturity;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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