Bank liquidity hoarding and corporate maturity mismatch: Evidence from China

Using a comprehensive data of 634 A-share listed firms and 128 commercial banks from 2012 to 2020 in China, and a newly constructed loan-weighted liquidity hoarding ( LWLH ) variable to measure a firm’s exposure to bank liquidity hoarding shocks, this paper investigates the impact of bank liquidity hoarding on corporate maturity mismatch. We find LWLH would aggravate the corporate maturity mismatch of investment and financing, mainly through shortening firms’ loan maturities or reducing the proportions of long-term credits. The aggregation effects are more prevalent for firms with lower internal financing capacity and higher industry competition. These results imply that the maturity mismatch of listed companies in China is more likely to be an alternative to deal with financial repression, rather than an active behavior for reducing financing costs. • Banks liquidity hoarding would aggravate the corporate maturity mismatch of investment and financing. • Banks hoarding liquidity would shorten loan maturities and reduce proportions of long-term credits, which intensifies corporate’s short-term financing and long-term investment behavior. • The credit supply-side factor is responsible for the corporate maturity mismatch. • Providing new evidences for emerging markets to explain why firms choose short-term financing for their long-term investment.