THE IMPACT OF BANK COMPETITION ON COMPANY’S LEVERAGE

• Main Authors: Wei-yu Chen, 陳葦芋
• Other Authors: Ruey-shii Chen
• Format: Others
• Language: zh-TW
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/86455791423259479661

碩士 === 大同大學 === 事業經營學系(所) === 102 === Shareholder value creation is business objectives. In recent years, the change of global economic environment is dramatic. It makes business management more difficult and intense competition in financial market from financial crisis to the subprime mortgage. How to find the optimal survival in the recession environment is necessary for each industry. Therefore, the evaluation before investment is more cautious and conservative than past. The change of financial environment forces companies finance change. In the early years, banks in Taiwan are occupied by a few public financial institutions with official background and. They are also the leader in financial market. Since 1990, government relax the Act of foundation application for financial institutions and SMEs set up branches and foreign banks set up. It makes domestic financial institutions increase rapidly. Then the private banks become the main role in financial market, and banks competition period beginning. Enterprise thus have more selectivity of finance. In this study, we take capital structure is the main spindle to investigate the impact of bank competition on company’s leverage, and understand the differences of company’s capital structure on bank public before and after. We divide the study years by analysis of bank’s ROA and profit growth rate. Then we analyze the impaction of bank competition n company’s leverage by panel regression. For the further study, we divide industries to high correlation and low correlation of firm leverage and ROA. Then also analyze the panel regression data. From the overall study data, we find it’s positive correlation on bank competition to company’s leverage. Once bank profit reduction, banks become to be willing to loan. So the company’s leverage also increases. However, the phenomenon only exists in high correlation company. For the low correlation company, it isn’t significant on company’s leverage and ROA, so this kind of companies don’t have borrowing needs. Therefore bank competition and loan relax can’t influence companies of low correlation.