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Bank Competition, Financial Development and Growth of Financially Dependent Industries: Fresh Evidence from China

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  • Habib Hussain Khan
  • Abdul Ghafoor
  • Fiza Qureshi
  • Ijaz Ur Rehman

Abstract

We empirically examine the role of the banking market structure and financial development for the growth of manufacturing and the financially dependent industries in China over the period of 1999–2014. We use both structural and non-structural approaches to assess the banking market structure and relate them to the growth of the manufacturing industries. The results of the study indicate that bank competition inspires industrial growth, particularly the growth of the financially dependent industries. Our findings further suggest that bank concentration undermines the growth of manufacturing industries in general and growth of the financially dependent industries in particular. These results are consistent across a number of sensitivity checks covering alternative measures of financial dependence, institutional factors such as property rights, quality of accounting standards and bank ownership and endogeneity consideration.

Suggested Citation

  • Habib Hussain Khan & Abdul Ghafoor & Fiza Qureshi & Ijaz Ur Rehman, 2018. "Bank Competition, Financial Development and Growth of Financially Dependent Industries: Fresh Evidence from China," Global Economic Review, Taylor & Francis Journals, vol. 47(2), pages 108-134, April.
    • Handle: RePEc:taf:glecrv:v:47:y:2018:i:2:p:108-134
    DOI: 10.1080/1226508X.2018.1436458
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    Cited by:

    1. Liu, Haiyun & Islam, Mollah Aminul & Khan, Muhammad Asif & Hossain, Md Ismail & Pervaiz, Khansa, 2020. "Does financial deepening attract foreign direct investment? Fresh evidence from panel threshold analysis," Research in International Business and Finance, Elsevier, vol. 53(C).
    2. Jennifer Watson, 2020. "The Provision of Long-Term Credit and Firm Growth in Developing Countries," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 7(2), pages 224-234.
    3. Bijoy Rakshit & Samaresh Bardhan, 2020. "Does Bank Competition Enhance or Hinder Financial Stability? Evidence from Indian Banking," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 9(special i), pages 75-102.
    4. 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.
    5. Qureshi, Saba & Rehman, Ijaz Ur & Qureshi, Fiza, 2018. "Does gold act as a safe haven against exchange rate fluctuations? The case of Pakistan rupee," Journal of Policy Modeling, Elsevier, vol. 40(4), pages 685-708.
    6. Hussain Khan, Habib & Kutan, Ali M., 2023. "Banking sector competition and firms’ financial constraints: Firm-Level evidence from developing economies," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 88(C).
    7. Khan, Habib Hussain, 2022. "Bank competition, financial development and macroeconomic stability: Empirical evidence from emerging economies," Economic Systems, Elsevier, vol. 46(4).

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