Abstract: The distribution of firm size is an important research issue in the fields of firm entry, exit and industrial structure adjustment. However, few scholars have studied the issue from the perspective of banking competition. We combine Annual Survey of Industrial Firms of China from 1999 to 2007 and the data of banking competition to empirically test the influence of banking competition on the state of firm size distribution. The results are as follows. First, the Pareto index of the firm size distribution increases year by year, which indicates the overall firm size becomes more and more uniform. Second, the banking competition has unbalanced effect on the growth of firms in different scales and is more favorable to the growth of small and medium-sized enterprises, thus making the distribution more uniform. A series of tests show that the above conclusion are very robust. The research provides a new idea to optimize the firm size distribution and promote the transformation of industrial structure.

Key words: banking competition, firm size distribution, financing constraints, firm growth