Abstract
We empirically examine the role of the banking market structure and financial development for the growth of manufacturing and the financially dependent industries in China over the period of 1999-2014. We use both structural and non-structural approaches to assess the banking market structure and relate them to the growth of the manufacturing industries. The results of the study indicate that bank competition inspires industrial growth, particularly the growth of the financially dependent industries. Our findings further suggest that bank concentration undermines the growth of manufacturing industries in general and growth of the financially dependent industries in particular. These results are consistent across a number of sensitivity checks covering alternative measures of financial dependence, institutional factors such as property rights, quality of accounting standards and bank ownership and endogeneity consideration.