Breaking barriers: the power of bank competition in driving firms’ new quality productive forces in China

This study examines how commercial bank competition influences firms’ new quality productive forces (NQPF) in China through a comprehensive composite indicator. Our analysis demonstrates that intensified bank competition significantly enhances firms’ NQPF by mitigating financial constraints, lowering credit costs, and strengthening internal controls. The positive effects are particularly pronounced when digital and green finance initiatives are combined, whereas government intervention negatively moderates this relationship. Heterogeneity analysis reveals stronger impacts for non-state-owned enterprises and high-tech firms. We address endogeneity concerns via an instrumental variable approach, with robustness confirmed through alternative specifications. These findings provide valuable insights into the nexus between banking sector dynamics and firm-level productivity enhancement in China’s evolving financial landscape.