Large banks’ service expansion and the survival of small and micro businesses: from the perspective of liquidity constraints

Small and micro businesses play a crucial role in expanding employment, fostering market development, and improving livelihoods. This study finds that the expansion of large banks at the county level can effectively enhance the survival of small and micro businesses. Mechanism analysis shows that such expansion promotes survival by intensifying competition in the county banking sector, improving digital credit levels, and optimising the financial ecosystem. Heterogeneity analysis further suggests that large banks should prioritise counties with underdeveloped financial systems, weak social credit foundations, limited government fiscal pressure, and low entrepreneurial activity, to improve financial resource allocation and support the survival of small and micro enterprises. Overall, this study provides both theoretical foundations and empirical insights for the healthy and sustainable development of small and micro businesses at the county level.