Explore of Bank Competition on Non-Financial Enterprises' Financial Capabilities: Shadow Banking as a Moderating Effect

Explore of Bank Competition on Non-Financial Enterprises' Financial Capabilities: Shadow Banking as a Moderating Effect | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Explore of Bank Competition on Non-Financial Enterprises' Financial Capabilities: Shadow Banking as a Moderating Effect Jun Cui This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-6671806/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract This study examines how competition in the banking sector affects the financial capabilities of non-financial enterprises in China, with a particular focus on the moderating role of shadow banking's financial innovation. Using panel data from 7,250 firm-year observations of Chinese private banks collected from CNRDS, Wind, and CSMAR databases from 2017 to 2022, we apply a fixed-effects model to investigate this relationship. Our findings indicate that increased banking competition significantly enhances non-financial enterprises' financial capabilities, particularly in terms of financing flexibility and capital allocation efficiency. Moreover, shadow banking's financial innovation positively moderates this relationship, strengthening the positive effect of banking competition on firms' financial capabilities. The results are robust across various alternative specifications and endogeneity tests. This study contributes to the literature on financial market competition, corporate finance, and the evolving role of shadow banking in China's financial ecosystem, providing important implications for policymakers and corporate financial management. Banking competition Financial capabilities Shadow banking Financial innovation Chinese private banks Full Text Additional Declarations The authors declare no competing interests. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-6671806","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":457031021,"identity":"4abef43d-c4e3-4d48-9d07-f4ab4b13f3c4","order_by":0,"name":"Jun Cui","email":"data:image/png;base64,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","orcid":"https://orcid.org/0009-0002-9693-9145","institution":"solbridge international School of Business","correspondingAuthor":true,"prefix":"","firstName":"Jun","middleName":"","lastName":"Cui","suffix":""}],"badges":[],"createdAt":"2025-05-15 10:49:20","currentVersionCode":1,"declarations":{"humanSubjects":false,"vertebrateSubjects":true,"conflictsOfInterestStatement":false,"humanSubjectEthicalGuidelines":false,"humanSubjectConsent":false,"humanSubjectClinicalTrial":false,"humanSubjectCaseReport":false,"vertebrateSubjectEthicalGuidelines":true},"doi":"10.21203/rs.3.rs-6671806/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-6671806/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":82901753,"identity":"dd72bbf5-e99c-406d-835e-854bb90b2abf","added_by":"auto","created_at":"2025-05-16 13:35:35","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":309616,"visible":true,"origin":"","legend":"","description":"","filename":"FinanceDigitalCScholarformatstandardSample6.pdf","url":"https://assets-eu.researchsquare.com/files/rs-6671806/v1_covered_d06fe6c4-f6aa-457b-9df5-8cd37d237724.pdf"}],"financialInterests":"The authors declare no competing interests.","formattedTitle":"\u003cp\u003eExplore of Bank Competition on Non-Financial Enterprises' Financial Capabilities: Shadow Banking as a Moderating Effect\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"Woosong University","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Banking competition, Financial capabilities, Shadow banking, Financial innovation, Chinese private banks","lastPublishedDoi":"10.21203/rs.3.rs-6671806/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-6671806/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThis study examines how competition in the banking sector affects the financial capabilities of \u0026nbsp;non-financial enterprises in China, with a particular focus on the moderating role of shadow \u0026nbsp;banking's financial innovation. Using panel data from 7,250 firm-year observations of Chinese \u0026nbsp;private banks collected from CNRDS, Wind, and CSMAR databases from 2017 to 2022, we apply \u0026nbsp;a fixed-effects model to investigate this relationship. Our findings indicate that increased banking \u0026nbsp;competition significantly enhances non-financial enterprises' financial capabilities, particularly in \u0026nbsp;terms of financing flexibility and capital allocation efficiency. Moreover, shadow banking's \u0026nbsp;financial innovation positively moderates this relationship, strengthening the positive effect of \u0026nbsp;banking competition on firms' financial capabilities. The results are robust across various \u0026nbsp;alternative specifications and endogeneity tests. 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