Bank Competition and Leverage Adjustments

Abstract

Abstract We test whether bank competition affects firms’ leverage adjustment speeds. Using Chinese data where bank concentration varies across both years and provinces, we find that underlevered firms move to their target leverage faster when bank competition is high. Tests surrounding an exogenous shock to bank competition lead to the same conclusion. We also find that small firms and nonstate‐owned firms exhibit faster leverage adjustments when bank competition is high, which is consistent with the conjecture that bank risk taking increases with competition.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 65 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.