CAPITAL CONSTRAINTS AND THE CREDIT STRUCTURE OF COMMERCIAL BANKS: EVIDENCE FROM CHINA

This study focuses on the impact of capital constraints on the credit structure of commercial banks. Through theoretical modeling and optimization process, this study draws the conclusions that large-sized banks would grant more loans to large-sized enterprises and fewer loans to small-sized enterprises under capital constraints, but small-sized banks would grant more loans to large-sized enterprises just under the liberalization of interest rates and capital constraints. This study also makes empirical tests using the 2002-2012 yearly panel data from commercial banks in China and panel estimations with SYS-GMM to examine the changes in the credit structures of commercial banks under capital constraints. The evidence from China indicate that the estimated impact of capital constraints on the change in the credit structures is greater for the small-sized banks than for the large-sized banks.