Financial institution coverage and firm's cross-regional investment: Evidence from China

IF 9.8 1区经济学 Q1 BUSINESS, FINANCE

International Review of Financial Analysis Pub Date : 2025-08-23 DOI:10.1016/j.irfa.2025.104571

Jennhae Liou , Zijin Wang , Tzeryan Jiau , Qiuyun Zhao

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Abstract

This study examines the role of financial institution coverage in facilitating cross-regional capital flows within China, offering insights into how financial market development influences spatial capital allocation. Using granular data on 10.5 million city-year observations of Chinese listed firms and their subsidiaries (2007–2022), we demonstrate that cities with greater financial institution density attract significantly more cross-regional investments. Policy banks emerge as key drivers compared to commercial banks, particularly for firms operating in competitive markets or exhibiting higher risk tolerance. Mechanism analyses reveal that financial institution coverage facilitates non-local corporate investment by lowering financing costs through the effects of mitigating information frictions and reducing financial institute market power. Our findings extend the discourse on intra-national capital mobility by identifying financial infrastructure as a critical determinant of spatial investment patterns, with implications for understanding institutional roles in emerging markets' financial integration.

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金融机构覆盖率与企业跨区域投资：来自中国的证据

本研究考察了金融机构覆盖率在促进中国跨区域资本流动中的作用，为金融市场发展如何影响空间资本配置提供了见解。通过对中国上市公司及其子公司1050万个城市年（2007-2022年）的观察，我们发现金融机构密度越大的城市吸引的跨区域投资显著增加。与商业银行相比，政策性银行成为关键的驱动因素，特别是对于在竞争市场中运营或表现出更高风险承受能力的公司。机制分析表明，金融机构覆盖通过缓解信息摩擦和降低金融机构市场支配力的作用，降低融资成本，促进境外企业投资。我们的研究结果通过将金融基础设施确定为空间投资模式的关键决定因素，扩展了关于国内资本流动的论述，这对理解新兴市场金融一体化中的制度作用具有启示意义。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

International Review of Financial Analysis BUSINESS, FINANCE-

CiteScore

10.30

自引率

9.80%

发文量

366

期刊介绍： The International Review of Financial Analysis (IRFA) is an impartial refereed journal designed to serve as a platform for high-quality financial research. It welcomes a diverse range of financial research topics and maintains an unbiased selection process. While not limited to U.S.-centric subjects, IRFA, as its title suggests, is open to valuable research contributions from around the world.