The Impact of Banking Structure on SME Financing in China: Based on The Theory of Small Bank Advantage

Small and medium-sized enterprises (SMEs) are essential to China’s national economy, but the financing difficulties constrain their long-term development. Based on the data of listed companies of SME and GEM (Growth Enterprise Market) from 2016 to 2023, this paper systematically analyzes the impact of small and medium-sized banks on SMEs’ financing by using the double fixed effect model. The results show that: (1)The development of small and medium-sized banks significantly reduces the financing constraints of SMEs, which verifies the validity of the theory of “small bank advantage” in modern times. (2)The development of digital finance weakens the marginal role of small and medium-sized banks, and large banks break through the geographic limitations and improve the efficiency of information processing through technological empowerment, weakening the traditional advantages of small and medium-sized banks. (3)The central and western regions rely more on the information advantages of small and medium-sized banks, while the role of small and medium-sized banks is limited in the eastern regions. This paper enriches the analysis of the economic effects of the advantages of small and medium-sized banks in the modern era, while providing empirical support for the financing of SMEs, the transformation of small and medium-sized banks and the optimization of regional financial resources in China.