Empirical Study of the Relationship Between Financial Development, Financial Structure and Capital Structure of Listed Firms in China

While controlling joint endogeneity and unobserved company characteristic in panel data model, the papers study empirically the relationship between financial development, financial structure and capital structure of listed firms in China. The results show that the size and activity of the bank and the size of stock market have a significant positive effect on the capital structure of listed firms, but the change of financial structure has a significant negative correlation with the capital structure of listed firms in China. Furthermore, this paper finds no evidence that the relationship between the activity of stock market and the capital structure of listed firms is highly significant in China.