Impact of Urban Commercial Banks Establishment on SMEs'Financing
Small and medium-sized enterprises(SMEs)are an important driving force in China's economic development;however,the vast majority of SMEs have difficulties in credit financing,and the financing costs of SMEs are high,which greatly exceeds the average cost of social financing.In order to enhance the capacity of financial institutions to better serve local enterprises,since the 1990s,various local banks such as urban commercial banks,rural commercial banks and village and township banks have been established in various parts of China.Among them,the most representative urban commercial banks have become the third echelon of China's banking industry and are important financial entities for granting credit to local SMEs.However,an important question to be answered is whether local banks can improve the financing capacity of SMEs while expanding their credit scale at a rapid pace.It is an basis to measure the efficiency of credit resource allocation of local banks to enhance the financing ability of smes.Based on the database of Chinese industrial enterprises,this paper empirically tests the impact of the establishment of city commercial banks on the financing of small and medium-sized enterprises by using the double difference model.The study finds that the establishment of urban commercial banks has led to a 3.19%decrease in the debt ratio of private SMEs,but does not have a significant impact on state-owned SMEs;in terms of the mechanism,the local government's reliance on land finance and real estate investment has crowded out the credit resources of urban commercial banks,which is an important reason for the decrease in the debt ratio of private SMEs;in terms of the consequences of the impact,the mismatch of credit resources has led to a 1.69%increase in the financing costs for private SMEs,and enterprises are forced to raise their profit retention for internal financing,which not only undermines their profitability but also limits employee compensation,thus reducing their long-term competitiveness and causing distortions in income distribution.The policy implications of the conclusions of this paper are as follows.Firstly,the governance structure of urban commercial banks should be further improved to limit the influence of local governments on the credit allocation of urban commercial banks,and to improve the marketization level of credit decisions.Secondly,the regulation of local governments'financing platforms should be improved,the reliance of local government on land finance and local banks should be reduced,and a stable and sustained source of funding should be provided to local governments.Finally,the incentive and assessment mechanisms of local governments should be further reformed,and the function of government should be changed from an"investment government"to a"service-oriented government".This will reduce the driving effect of the GDP championship between cities on the financing needs of local governments,thus objectively alleviating the"capital hunger"of local governments and reducing distortions in the allocation of credit resources of local banks.The research provides an important theoretical basis for promoting the development of local financial institutions.
urban commercial bankssmall and medium-sized enterprises financingmisallocation of resourcesland finance
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