Recently, Professor Zhisheng Li, director of the base, and Dr. Ling Jin, researcher of the base, cooperated on the paper "Does bank competition improve enterprise investment level and resource allocation efficiency? -- Based on the Spatial Distribution of Branches (No.1, 2021), the paper "Targeted RRR Cuts, Loan Availability and Business Credit of Small and micro Enterprises -- Empirical Evidence Based on Breakpoint Regression" (No.3, 2021) by Professor  Dongmin Kong and collaborators Haiyang Li(School of Business, East China University of Science and Technology) and  Wei Yang (School of Business, East China University of Science and Technology), They were respectively awarded the Excellent Paper of 2021 by "Financial Research".

Does Bank Competition Improve firm Investment Level and Resource Allocation Efficiency? Based on the Spatial Distribution of Branches

Zhisheng Li  Ling Jin

Abstract: Bank loan is an important way of financing Chinese enterprises, plays a pivotal role in the production and operation of enterprises. In 2006 and 2009, China relaxed the market access regulation of commercial banks' branches, the spatial distribution of bank branches changed greatly, and the competition level of banks and their ability to serve the real economy were significantly improved. This paper uses the industrial enterprise data of National Bureau of Statistics from 2001 to 2012. The influence of bank competition on enterprise investment is studied by measuring the level of bank competition with the number of bank branches around enterprises. It is found that the increase in the number of bank branches significantly improves the investment level and investment efficiency of enterprises. Further research shows that the increasing number of bank branches can improve the investment efficiency of enterprises mainly in under-invested enterprises and non-state-owned enterprises, and the reduction of corporate financing constraints and agency conflicts are the main reasons for the improvement of investment efficiency of enterprises. This study expands the literature on bank competition, corporate investment and resource allocation efficiency, and has implications for the supply-side structural reform and high-quality development of the banking industry.

Key Words: bank competition; Spatial distribution of bank branches; Enterprise investment; Investment efficiency

Targeted RRR Cuts, Loan Availability and Business Credit for Small and micro Enterprises: Empirical Evidence Based on regression of Breakpoints

Dongmin Kong, Haiyang Li, Wei Yang

Abstract: Small and micro enterprises have played an important role in the economic development of our country, but because of the long-term financing constraints, they have to resort to informal system (such as business credit) to alleviate financing difficulties. The Fifth Plenary Session of the 19th CPC Central Committee made it clear that we should support the growth of small and micro businesses as important birthplaces of innovation and improve the policy system to promote their development. Among them, the implementation of the monetary policy of "precise drip irrigation" is particularly important for the growth of small and micro enterprises, and is an inevitable requirement for financial services to serve the real economy. The policy of targeted reserve requirement reduction by the central bank encourages banks to provide loans to small and micro enterprises, which helps to dreg the financing channels of small and micro enterprises through the formal system (such as bank loans). Based on the natural experiment of targeted RRR cut, this paper uses breakpoint regression design to evaluate the impact of loan availability on the commercial credit of small and micro enterprises. The findings are as follows: First, the formal system has an obvious substitution effect on the informal system, that is, after the availability of loans for small and micro enterprises increases, the demand for business credit decreases significantly. Second, different model Settings and robustness tests all reach the same conclusion. Third, the impact of loan availability on the commercial credit of small and micro enterprises varies due to the heterogeneity of enterprises. This study provides evidence from China's small and micro enterprises for the substitution relationship between bank loans and commercial credit, helps to understand the impact of targeted reserve ratio reduction policy on the financing decisions of small and micro enterprises, and provides reference for policy formulation to support the development of small and micro enterprises.

Key Words: targeted RRR cut; Availability of credit; Small and micro enterprises; Commercial credit; Breakpoint regression

Since 2010, the journal of Financial Studies has selected the Annual Excellent Papers of the Journal of Financial Studies every year. This year is the 13th edition. The participating papers are all the papers published from January to December 2021. After communication review, online review meeting, result announcement and other procedures, 7 excellent papers of 2021 in Financial Research were finally determined.