Bank Competition and Industrial Investment —Theoretical Analysis and Empirical Test Based on OLG Model
Mingyi Gong, Jiadong Chen, Zhengyang Han
Available Online 20 December 2019.
- https://doi.org/10.2991/aebmr.k.191217.128How to use a DOI?
- Bank Competition, OLG Model, Industrial Investment, Crowding out Effect
- 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.
- Open Access
- This is an open access article distributed under the CC BY-NC license.
Cite this article
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 - https://doi.org/10.2991/aebmr.k.191217.128 ID - Gong2019 ER -