Bank Competition and Industrial Investment —Theoretical Analysis and Empirical Test Based on OLG Model

DOI

10.2991/aebmr.k.191217.128How to use a DOI?

Keywords

Bank Competition, OLG Model, Industrial Investment, Crowding out Effect

Abstract

The development of the banking industry has a major impact on long-term economic growth, and the degree of competition in the banking industry has an important impact on banking industry. On the basis of the fast development of banking and financial industry, studying the impact of banking competition on the economy has become more and more significant. Based on Overlapping Generation Model (OLG) model about banking system for modeling analysis, this paper theoretically studies the impact of bank competition on physical investment, and finds that as long as the banking industry has monopoly market power, it will cause crowding-out effects for industrial investment: the greater the monopoly of the banking industry, the greater the crowding-out effect on industrial investment. Furthermore, this paper uses the data of China’s A-share non-financial industry listed companies and the data of Chinese provinces and cities to empirically explore the crowding-out effect of bank competition on corporate industrial investment. By utilizing theoretical model, this paper empirically test theory that the degree of bank competition does influence the crowding effect on industrial investment based on empirical results of data in China. We also constructed the Herfindahl-Hirschman Index (HHI) of the banking industry for robustness analysis, providing more evidence to support that the crowding-out effect of investment is affected by the degree of bank competition.

Copyright

© 2019, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Mingyi Gong
AU  - Jiadong Chen
AU  - Zhengyang Han
PY  - 2019
DA  - 2019/12/20
TI  - Bank Competition and Industrial Investment —Theoretical Analysis and Empirical Test Based on OLG Model
BT  - Proceedings of the 2019 International Conference on Economic Management and Cultural Industry (ICEMCI 2019)
PB  - Atlantis Press
SP  - 712
EP  - 726
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.191217.128
DO  - 10.2991/aebmr.k.191217.128
ID  - Gong2019
ER  -